Adjustable Mortgages – Risk vs. Reward

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What are the risks of adjustable mortgages?

Adjustable Mortgages – Risk vs. Reward

Many people today are keeping their mortgage payments lower by getting adjustable rate mortgages. Adjustable mortgages are often fixed at a very low interest rate for anywhere from 6 months to 5 years. These very low rates can keep your payments low for a while, but what will happen once they begin to adjust? This is where the risk comes in.

Nobody knows how mortgages will be affected by future interest rate changes. If you are in an adjustable rate mortgage, you should keep your eyes peeled for changes to the interest rates. If you see a pattern of rate changes that may be bad for your adjustable mortgage, think about getting the loan refinanced before it begins to adjust.

The risks involved in adjustable mortgages can be high if you are not prepared. However, if you are prepared to quickly get your loan refinanced before it begins to adjust, you can move it into a fixed rate or into a longer adjustable period. Either way, don't let your mortgages adjust to the point where you are paying a high premium just to have a roof over your head.



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