Adjustable Rate Mortgages Still Have a Place

Adjustable rate mortgages (ARMs) were vilified during the financial crisis.  In some cases, they were used to buy homes that borrowers really couldn't afford.  When rates adjusted, monthly payments changed and some couldn't afford the new payments.

However, ARMs still have a place in the world.  They can make sense and be perfectly reasonable tools as long as everybody understands what's going on.  Unfortunately, during the housing boom, people -- even lenders -- didn't understand the risks.

Marketplace money describes how ARMs might be used to buy a home in today's environment.  They're still adjustable, but careful borrowers can benefit from ARMs without getting themselves too far out on a limb.

Further reading:

• Pros and Cons of ARMs