Video — Understanding ARMs -The Adjustable Rate Mortgage

Adjustable Rate Mortgages commit buyers to making loan payments that may change over time as market interest rates change. If interest rates go up, payments go up and the borrower has to meet those payment obligations.

ARM rates may be lower than fixed rates now. Look at your personal situation to assess if you can handle the risk of future increases.

Is your income likely to increase over the years to come?

Will you be staying put, or do you anticipate selling the home and moving?

While an ARM may put a larger loan amount in reach now, make sure you can keep up with that commitment if rates increase in the future.