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.
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