Why is an adjustable rate mortgage (ARM) beneficial?

An adjustable rate mortgage (ARM) is beneficial because it allows homeowners to take advantage of potential savings over time. The main benefit of an ARM is that the interest rate will fluctuate over time, allowing homeowners to pay a lower rate in the short-term, and potentially a higher rate in the long-term if interest rates go up. This flexibility can be beneficial for homeowners who need to make a lower payment in the short-term, or who expect to need a higher rate in the long-term. In California, ARM loans offer not only the potential to save money over time, but they also may be the only option for some borrowers. Due to the relatively high cost of living in California, some borrowers may need to borrow more money than normally allowed by a fixed-rate mortgage. By taking out an ARM loan, borrowers can get the loan amount they need as well as the flexibility to pay off the loan early or adjust the terms of the loan if interest rates change. Because of the potential to save money over time with an ARM, many homeowners in California opt for this loan option. With an ARM, homeowners can take advantage of the potential savings of a lower interest rate in the short-term and can be prepared if the rate increases in the future. Borrowers should be aware, however, that there is a risk of the rate increasing significantly in the future, and should talk to a mortgage lender to understand the terms of the loan and the risks associated with taking out an ARM.

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Why is an adjustable rate mortgage (ARM) beneficial?

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