Are ARM Loans Right for You? The Pros and Cons Explained

Written By Taylor Beattie

When shopping for a home loan, many borrowers consider an ARM (Adjustable-Rate Mortgage) because of its initially lower interest rate. But while ARMs can be a smart choice for some, they’re not ideal for everyone.

What is an ARM Loan?

An ARM starts with a fixed interest rate for a set period - typically 3,5,7, or 10 years - before adjusting periodically based on market rates. This means your monthly payment could increase or decrease over time.

When an ARM Loan Can Be a Good Choice

  • Short-Term Homeowners

  • High-Income Growth

  • Those Wanting Lower Initial Costs

When an ARM Might Not Be Right

  • Long-Term Homeowners

  • Tight Budget Borrowers

  • Rising Rate Environments

Bottom Line

An ARM loan can be a great tool for strategic borrowers who understand their timeline and risk tolerance. But if you value stability and predictable payments, a fixed-rate mortgage may be a better fit.

Taylor Beattie
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