Adjustable-Rate Mortgage: Good or Bad Idea as Rates Rise?

Adjustable-rate mortgages got a bad rap after the housing. But it won’t rise more than 5 percent overall over the lifetime of the loan. When you sit down with your lender to discuss an.

An adjustable-rate mortgage, with its lower initial interest rate and monthly payment, can seem a tempting alternative to a higher fixed-rate loan when mortgage rates are rising. "People are trying to squeeze into a more affordable payment," says Jeff Lazerson, president of Mortgage Grader, a ho.

Getting an adjustable-rate mortgage, or ARM, in a rising interest rate environment might seem like a bad idea. After all, why would a borrower want a loan that’s susceptible to rate hikes in the.

There’s the silly, the foolish and the completely harebrained. And then there’s the adjustable rate mortgage — ARM for short. Like unprotected sex or one more drink, it always seems like a good idea at the time. In an environment of only low and lower rates, an ARM has looked like a good idea for.

3 Reasons an Adjustable-Rate Mortgage Is a Bad Idea. Share.. a 75% rise in housing costs would be a big deal.. The article 3 Reasons an Adjustable-Rate Mortgage Is a Bad Idea originally.

The adjustable-rate mortgage (commonly known as the ARM loan) has an interest rate that will adjust or "reset" at a predetermined frequency – every three years, every five years, etc. This is very different from the fixed-rate mortgage loan, which holds the same interest rate over the entire life of the loan.

Certainly rates are a big reason, though the cost of taking out an adjustable rate mortgage is also on the rise as well. Rates on fixed 30-year mortgages are hovering around 4.5%, up from a low of.

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Taking out an ARM as rates rise, like now, could be a bad idea because borrowers might face higher mortgage payments once the annual loan adjustments kick in. But getting an ARM can be a good strategy.

Mortgage Rates In 2017 Are Headed Where? Mortgage rates dropped quickly today as global financial markets underwent a volatile shift. When money is flowing out of stocks and into bonds (as it was today) rates move lower.

Learn the adjustable-rate mortgage pros and cons so you can decide whether an ARM is right for you.. Adjustable-Rate Mortgages: The Pros and Cons. An ARM can be a good idea if your life is.

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