The potential ARM candidate is probably not a first-time homebuyer.  They should be tolerant to risk and more financially savvy with predictably increasing income.  These buyers may recognize that they do not intend to stay in the home for a long time. Adjustable-rate mortgages, generally start out at a lower-rate than a fixed-rate but can adjust, up or down, based on an independent index plus a specified margin and anniversary date that are referenced in the note.  Most ARMs have stated interest rate caps that limit the amount of adjustment of the rate both on a periodic basis and a … Continue reading...