Sometimes it makes sense to refinance into an ARM
Low mortgage rates have many homeowners rushing to refinance, and the vast majority of those borrowers opt for fixed-rate home loans. Yet for some homeowners, an adjustable-rate mortgage can be a financially savvy choice.
Nowadays, adjustable-rate mortgages, or ARMs, appeal to two groups of borrowers. The first group consists of homeowners who need jumbo loans, above the conforming loan limit of $417,000 in most markets or $625,500 in high-cost housing markets. Many of these borrowers want to keep their payments as low as possible when they refinance, so they’re attracted to lower-rate ARMs.
The second group comprises homeowners who have firm plans to sell their homes in a few years because of scheduled job transfers or retirement.
Interested in how different mortgages and rates affect monthly payments? Check out our handy Wahomeowners Calculators to see!