| ARM rates are just adjustable rate mortgages that | | | | interest rate will be fixed for the entire loan term. It is |
| increase or decrease your monthly mortgage | | | | the easiest mortgage to get but it will probably have |
| payment depending on the prime rate. If the federal | | | | the highest interest rate. |
| prime rate increases then your interest rate will | | | | Use a mortgage calculator to determine if you can |
| increase and adjust your monthly payment accordingly. | | | | afford the fixed rate mortgage because it is by far the |
| There are a few types of adjustable rate mortgages | | | | best choice available. The calculators will tell you your |
| including a 1 year, 3 year, 5 year and an interest only | | | | monthly payment based on the current interest rate |
| loan. If you have a 1 year ARM rate that means your | | | | and loan term. That way you can play around with |
| interest rate will be fixed for one year and then adjust | | | | them to figure out your best mortgage option available |
| once a year after that. The three year ARM rate | | | | for your situation. Sometimes an ARM rate would be |
| would be fixed for 3 years and then adjust once a | | | | the correct choice but I don't think it is in this economy. |
| year after that. | | | | The interest rates are so low right now that they can't |
| The one year adjustable rate mortgage is the highest | | | | go too much lower and the risk of them going up |
| risk so it will have the lowest interest rate to make it | | | | would be too much for anyone to take. |
| the most appealing. The rates will get higher and higher | | | | I recommend using an interest calculator to figure out |
| as you get less risk involved. The fixed rate mortgage | | | | all of your monthly mortgage payment options and |
| would be the least amount of risk because your | | | | weigh them against each other. |