Part 5/11:
ARMs typically offer lower initial interest rates—around 5.8% for a 7- or 10-year fixed period compared to approximately 6.3-6.4% for standard 30-year fixed loans. This potential savings of thousands over the initial years makes ARMs attractive, provided homeowners are comfortable with the interest rate resetting after the fixed period.
Critics often label ARMs as risky, but experts argue that with proper understanding, they can be a valuable tool—especially when considering long-term historical averages. Barry, a mortgage expert, emphasizes that the risk of rates rising to 7% or higher in the future is low, and the initial savings and equity gains can make ARMs a sound choice for many.