Compared to a fixed rate loan, which offers a fixed interest rate, low risk, and high predictability, an adjustable rate mortgage is less stable. However, there are advantages to an adjustable rate mortgage.

Advantages of an adjustable rate mortgage include:

• A significantly lower initial interest rate
• A low initial payment
• Easy qualification
• Helping a buyer get a bigger loan

An adjustable rate mortgage has a significantly low initial interest rate, known as a teaser rate.

What is a teaser rate?

• The beginning rate for an adjustable rate mortgage
• Usually a very low interest rate
• A rate used to catch the attention of the buyer
• A rate that usually goes back to the normal rate after 6 months

-->A buyer must be conscious of the fact that an adjustable rate mortgage is two sided

-->The interest rate could be lower, thus favoring the buyer, but it could also rise, which would cost the buyer more money in interest, at least until the rate drops again

Refinancing, which costs money, is always an option. This can help to get your interest rate back down.

You may want to refinance your home if:

• You want to lower your interest rate and ultimately save money
• Borrow money to use for things such as home improvements or other debts