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Peggy Smelcer
Broyles Real Estate & Auction 
Cell:     423-312-7170
Office:  423-586-6103
Email: info@PeggySmelcer.com
Licensed in Tennessee
 
Prompt,Courteous  Service...
"It's What I Do!"

Thank you for visiting today. If this is your first visit, take your time and look around. I have plenty of information and resources available to you. If you are a return visitor, thank you. I would love to hear from you and tell you how I can serve all your real estate needs.

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Adjustable Rate Mortgages - The PROS & CONS

Now that you know what an ARM is and how it works, you may be wondering what the advantages and disadvantages are. So let’s explore that issue.

Offering adjustable rates allows lenders to transfer part of the interest rate risk from themselves to the borrower. If you get a fixed rate mortgage and the interest rate then goes up, it costs the lender money. However, if you have an adjustable rate mortgage, as the interest rate goes up, so does your payment, thus compensating the lender. Adjustable rate mortgages are particularly useful when unpredictable interest rates make fixed rate loans hard to get.

One of the main advantages of an adjustable rate mortgage is that the initial interest rate is lower than that of a fixed rate mortgage. A lower rate means lower payments, which may help you qualify for a larger loan. This is an important detail if you expect your future earnings to rise. In this case, the ARM will allow you to qualify for a larger loan amount earlier rather than later.

However, this information should only be used with care. If you use an ARM to qualify for a larger loan amount than a fixed rate would allow you and the interest rate then rises drastically or your income doesn’t rise, you may not be able to afford the larger monthly payments, thus causing you to default on your loan.

A situation in which an adjustable rate mortgage makes sense would be if you are only going to keep the house for a short period of time. If you are only planning to own your house for only a few years, the risk of the interest rate rising goes down. This means that you will get a better rate with an ARM, making it a good choice. However, if you plan on staying in your home for a long period of time, a fixed rate may be a better option.

The lesson here is to have a plan. Know what your goals are in purchasing a home and plan for all eventualities. Do your research when shopping for an ARM and consider the worst-case scenario.

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Testimonials Page

I'm so glad I saw you on fb. My husband and I brought our home and you were out realtor last January. We absolutely love our home it feels like it should have always been ours. It has changed on the inside so much. I would love to fb u some pic so u could see the difference. But by all means if you are ever out our way stop and see us. Thanks again for helping our dreams come true I hope you have a Merry Christmas. Dusty R
I want to thank you in a very special way for your help in selling our property in Sevierville, in such short amount of time, hassle free at a great price for today's market value with such professionalism. Jeanette S
I'm sitting here in my wonderfully bright kitchen, Jake outside puttering in his shed. Needed to let you know how much we love our new home. Thank you for all of your help!! Bernadine J.
Thanks for all your help in making our "dream home" a reality. We really appreciated that you went the extra mile to get us the best price for our home. You are truly a professional. Sue and John
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