Mortgage rates driving you crazy? Why some are turning to ARMs

Reader,

People are getting creative and trying to outsmart those sky-high mortgage rates.

Remember adjustable-rate mortgages (ARMs)? Well, they're making a comeback. 

ARM applications now make up 7.8% of all mortgage applications - the highest this year! And that’s just because people are desperate to find ways to afford homes.

What's an ARM, Anyway? 

It's a home loan that begins with a set rate for an initial period, then can adjust periodically. Currently, 5-year versions of these loans average around 6.60%, compared to traditional 30-year options at 7.29%.

But there's always a catch. With ARMs, you might save money, but your payments could jump later. It's a bit of a gamble on future interest rates.

Mike Fratantoni from the Mortgage Bankers Association says buyers use ARMs to "improve affordability." 

However, the Consumer Financial Protection Bureau warns that you should only consider an ARM if you can handle potentially big payment increases down the road.

With inflation still high and mortgage rates up, people are getting creative when buying homes. 

But it's crucial to understand the risks before jumping on the ARM bandwagon.

If you're house hunting, consider all your options carefully. 

Talk to a financial advisor and think long-term: Can you handle higher payments if rates rise? 

Remember, there's no one-size-fits-all in home buying. What works for your neighbor might not work for you!

Before making any decisions, download The Ultimate Alternative Investment Guide to explore other strategies that might better fit your financial goals.

What do you think about all this? Would you consider an ARM to buy a home? Or does it sound too risky?

Stay savvy,

Legacy Alliance Insider