ARMs (Adjustable Rate Mortgages)
ARMs offer an initial fixed interest rate period, after which the rate adjusts at predetermined intervals. They're suitable for those expecting their income to increase or planning to move before the rate adjusts.
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Benefits
- Lower initial interest rates compared to fixed-rate mortgages.
- Potentially lower payments during the initial fixed period.
- Good option for short-term homeownership.
Eligibility/Requirements
- Decent credit score (varies by lender).
- Stable income.
- Understanding of how ARM adjustments work and potential future rate increases.
Here’s an example
Carlos, a young professional, isn't planning to stay in his home for more than a few years. He chooses an ARM from Hometown Mortgage, benefiting from lower initial payments while he builds his career.