What you need to know about ARMs loans
Do You Qualify For An ARM Loan?
Have you heard of ARM loans? It stands for "adjustable-rate mortgage," and you might be pleasantly surprised to discover that there are situations where it can be a better choice than a fixed-rate mortgage.
Let's dive into the top three advantages of an ARM loan, and why it could be the right fit for you:
Build equity faster: One major benefit of an ARM loan lies in its lower interest rate during the fixed period. Over the course of, let's say, five years, a borrower with an ARM loan will have paid off a larger portion of their loan balance compared to someone with a 30-year fixed mortgage. This means you can build equity in your home at a faster pace!
Save on overall interest: With an ARM loan's lower interest rate, you have the opportunity to save money. Take advantage of these savings by putting extra funds toward paying down the principal amount of your loan. By doing so, you can reduce the total interest paid over the life of the loan.
Ideal for short-term plans: Are you planning to move in the next few years? An ARM loan can be advantageous in such situations. By selling your home before the interest rates adjust, you can avoid the possibility of facing a higher rate. It's a smart move for those who don't plan to stay in their homes for an extended period.
So, if you're looking for a mortgage that offers flexibility, potential savings, and suits your short-term plans, an ARM loan might be the right choice for you.