Adjustable Rate Mortgages: Why They Make Sense Again

Why ARMs are coming back in vogue
Why ARMs are coming back in vogue

Even with a potential double dip recession underway and fixed-rate mortgages boasting all-time low rates, some homebuyers are taking a shot at adjustable-rate mortgages (ARMs). While 30-year fixed-rate loans are hovering around the 4.5 to 4.75 percent interest mark, buyers who opt for 5/1 adjustable-rate products will enjoy rates as low as an astonishing 3.1 percent for the next five years.

"What we're seeing right now with five-year adjustable rate mortgages is interest rates that are shockingly low," explains Neil Merritt, senior director for Sherman Bridge Lending in Colleyville, Texas. "The low rates are bringing a number of buyers back into the adjustable rate market."