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What are Adjustable Rate Mortgages?

In: Loans, Mortgages, Home Equity and Refinancing, Home Buying, Money Management [Edit categories]

Answer:

Having an adjustable rate mortgage means that the interest rate can be changed by you or your loan provider after a few years. This can be dangerous for the homeowner, because if national interest rates go up, the interest rate on your adjustable rate mortgage could go up too.

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Relevant answers:

What are the cons of an adjustable rate mortgage?
One of the cons of an adjustable rate mortgage is that interest rates could go up while you are still under your motgage.
What are the features of adjustable-rate mortgages?
Lenders, buffeted by interest rate risk, looked to shift the risk to the borrower. In exchange, they offered borrowers a lower initial rate
Which has the lowest interest rate the fixed rate mortgage or the adjustable rate mortgage?
What the base line interest rates are when you are taking out your mortgage will determine which is the best value. Remember what is the lowest rate now may not be the lowest in a couple of years.
What can happpen with an adjustable- rate mortgage?
The most obvious thing that can happen is that your interest rate can rise and fall either monthly, quarterly, annually or in otherwise determined sets of years (5 years, 10 years etc). This can...
Can adjustable rate mortgages be converted to fixed rate loans?
Of course they can, provided that your credit situation doesn't prevent banks from wanting to refinance your loan.