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Adjustable Rate Mortgages

By: Jeremy Maddock, Fri Dec 9th, 2005 05:38:05 PM

An adjustable mortgage is an arrangement where a homebuyer takes out a loan with a variable or "floating" interest rate. This means that the interest rate paid will move up and down according to current conditions in the real estate market.

Borrowers usually pay slightly below the market average at the beginning of the term, which serves as an incentive to choose the adjustable rate.

In short, and adjustable mortgage results in a higher risk to the borrower, but also an opportunity to take advantage of lower rates in the future. In most cases, buyers are given the opportunity to "lock in" to a fixed rate at some point during the term of the contract.

To find out more about adjustable rate mortgages, and other types of real estate financing, you may wish to try using some mortgage information services.

About the author: Jeremy Maddock is the webmaster of FinanceFacts.info, a useful source of finance articles.

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