These
loans generally begin with an interest rate that is 2-3 percent below
a comparable fixed rate mortgage, and could allow you to buy a more
expensive home.
However,
the interest rate changes at specified intervals (for example, every
year) depending on changing market conditions; if interest rates go
up, your monthly mortgage payment will go up, too. However, if rates
go down, your mortgage payment will drop also.
There
are also mortgages that combine aspects of fixed and adjustable rate
mortgages - starting at a low fixed-rate for seven to ten years, for
example, then adjusting to market conditions. Ask your mortgage professional
about these and other special kinds of mortgages that fit your specific
financial situation.
