Why Adjustable-Rate Mortgages Are Hot Again

Many home borrowers are warming up to adjustable-rate mortgages (ARMs) as a result of the recent spike in interest rates. ARMs accounted for about one in four residential loan applications in 2006, but became much less popular during the recession and recovery. Applications for ARMs have held a market share of only a few percentage points since September 2008. However, recent data from the Mortgage Bankers Association reflects steady growth in ARMs in May and June, to as high as 7.5 percent the week ending June 28 and most recently reaching 7.2 percent the week ending July 12. Before signing up for an ARM, borrowers should make sure that they understand the mortgage and decide whether the product meets their need. Experts say the product is most suitable for home buyers who expect to move within 10 years as well as for jumbo borrowers, who can save tens of thousands of dollars by choosing an ARM over fixed-rate financing. | Read More