The San Diego-based research firm, DataQuick , reports that adjustable rate mortgages , which all but vanished during the Great Recession, are gaining in popularity once again. Home prices and interest rates are on the rise and adjustable rate mortgages (ARMs) can help keep the monthly payment affordable – at least for a limited time. Though these mortgages offer a lower interest rate initially, the rate can rise, after an initial fixed term, with market changes. The borrower needs to be aware, informed and manage this mortgage smartly.
In the higher end markets, homeowners are willing to take the risk. In November 2013, 11.2% of homes in California purchased with loans were financed with ARMs. That is double the rate of the same month in 2012, according to DataQuick. With interest rates expected to rise in 2014, we may see the number of adjustable rate mortgages increase further.
Mortgage Brokers say that buyers who plan to move after a few years, or those with considerable, but irregular income might be well-suited for ARM financing. Consult your REALTOR to discuss if ARM financing might work for you,
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