What is a Variable Rate Mortgage?
Variable-rate mortgages, also known as adjustable-rate mortgages (ARMs), are more complicated than fixed-rate mortgages. Their initial interest rate will usually be lower than a fixed-rate mortgage. However, the interest rate of the mortgage will change over time, and as a result, your payments may go up or down accordingly. They may be ideal for you if you:
- Don't expect to own your home for more than five years.
- Want the lowest initial interest rate possible and are willing to possibly pay higher rates down the road
- Expect to eventually make a higher salary
- Expect interest rates to decline
- Plan to downsize your home