Buying a house is a big adventure—and so is choosing the right mortgage. That’s true whether you’re buying a home for sale in Uptown Charlotte, a single-family home for sale in Mint Hill, or even a condo in another area such as South Park or Ballantyne.
In some cases, an adjustable-rate mortgage is the right choice.
What is an Adjustable-Rate Mortgage?
An adjustable-rate mortgage, unlike a fixed-rate mortgage, is commonly called an ARM. It’s a mortgage loan with an interest rate that can change when the market fluctuates.
How Does an Adjustable-Rate Mortgage Work?
An adjustable-rate mortgage typically has an initial fixed-rate period. During that time, your interest rate won’t change, no matter what happens on the market.
After the initial fixed-rate period, though, your interest rate can change at pre-set intervals. It’ll all be in your mortgage loan documents, which you should read thoroughly before you sign.
When is it a Good Idea to Choose an Adjustable-Rate Mortgage?
While this isn’t financial advice—you should talk to your financial adviser for that—some people find an adjustable-rate mortgage preferable to a fixed-rate mortgage when they want a lower monthly payment. The interest rate can go lower than it was initially, if the interest rates on the market drop… but it can go up, too, which means your monthly payments will increase.
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