Adjustable
Rate Mortgages
These
loans generally begin with an interest rate that is 2-3 percent below a comparable
fixed rate mortgage, and could allow you to buy a more expensive home.
However,
the interest rate changes at specified intervals (for example, every year) depending
on changing market conditions; if interest rates go up, your monthly mortgage
payment will go up, too. However, if rates go down, your mortgage payment will
drop also.
There
are also mortgages that combine aspects of fixed and adjustable rate mortgages
- starting at a low fixed-rate for seven to ten years, for example, then adjusting
to market conditions. Ask your mortgage professional about these and other special
kinds of mortgages that fit your specific financial situation