Adjustable Rate Mortgages, better known as ARMs, have been chastised over the last year or two and have even been blamed for causing the current "global economic crisis." Imagine that, me convincing a homebuyer to get an ARM is the reason that Chrysler failed, McCain lost, and a homebuyer actually needs money in order to buy a house. I had no idea that I had that kind of power.
With all of this bad press, I wanted to try to clear the air and stick up for a tool that I actually used to buy my own house. ADJUSTABLE RATE MORTAGES ARE NOT BAD! What is bad is not understanding what you are getting when you get an adjustable rate mortgage. You are getting a loan that has a fixed rate for a certain period of time. In most cases, that period of time is 3 or 5 years. If you stay in this loan for longer, then your interest rate is going to adjust. Your new rate will be based on an index plus a margin. It is important that you understand this upfront.
It is also important that you understand this before deciding to refinance out of your ARM. Do the research or better yet, call me and I will do the research.
ARMs are not for everyone but they are a good fit for some. This includes me. I am still in my ARM and my rate actually went down this year. (Lesson: Do not be too quick to refinance out of that ARM.)
The problem with ARMs is not the loan. The problem with ARMs is a lack of understanding.
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