ARMs Make a Comeback: Save Big or Face Risk?
Adjustable-rate mortgages (ARMs) are gaining popularity, particularly in California, offering better affordability with lower initial rates. For instance, a $832,750 loan could save $263 per month, or $15,800 over five years. However, there are risks, such as payment shock if rates increase after the fixed period. Despite this, ARMs today are safer than subprime loans from the past, with no prepayment penalties and the option to convert to fixed rates. With a solid exit plan and risk tolerance, ARMs can provide significant savings.
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