Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy

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My mortgage payments are by far my largest monthly expense, so when I recently got the chance to cut them, I cut them as deeply as I could โ€” even though it meant doing something I never thought Iโ€™d do: Forgoing the security of a fixed-rate mortgage for an adjustable one.

An ARM, also known as a โ€œvariable-rate mortgage,โ€ offers a low introductory interest rateโ€”typically for three, five, seven or 10 yearsโ€”and when that period ends the rate turns into a floating rate for the remainder of the loan. Once rates adjust, mortgage payments for an ARM can double or even triple. With todayโ€™s mortgage rates at or near record lows, future rates may have only one way to go: up.

I knew ARMs had earned a pretty bad rapโ€”they were involved in many of the mortgage defaults that rocked the housing market during the Great Recession. And every mortgage lender I spoke to told me to steer clear of ARMs, since I didnโ€™t know how long I would own my new home. (At the time I was single, with no plans to move in the foreseeable future.)

https://money.com/mortgage-refinance-arm/

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