In today’s housing market, home interest rates are steadily rising. Due to the increased interest rates, some homeowners may choose adjustable-rate mortgages (ARMs) over traditional fixed-rate mortgages. The experts at Indigo Mortgage in New Mexico can help you better understand which home mortgage type is best for you.

An adjustable-rate mortgage (ARM) is when the mortgage rate is only fixed for a certain time frame, for example, 5-7 years. After the fixed term, the interest rate will adjust according to the current market, which could increase or decrease. Historically when rates are rising, ARMs tend to have a slightly lower rate than a fixed mortgage. The idea is that borrowers will take advantage of the lower rates with the ARMs in hopes that they will sell their property in 5-7 years, or the rate will drop, and they can refinance down the road. Based on what we’ve seen at Indigo Mortgage in the current housing market, the rates for ARMs are not low enough to justify the risk.

The uncertainties associated with ARMs can be daunting, so it’s important to work closely with your mortgage lender. At Indigo Mortgage in Albuquerque, we urge buyers to shop local. Purchasing a home is a big responsibility. Our team is here to educate you and help you make the most informed decision possible on your home loan.