A recent survey by U.S. News & World Report reveals that 43% of those who took out an adjustable-rate mortgage (ARM) regretted it. While an ARM allows buyers to take advantage of lower rates for a period of time, ARMs are still less popular than fixed-rate mortgages, according to Mortgage Bankers Association.
About 1,200 borrowers with an ARM participated in the survey taken between Dec. 14 and 20, 2022. Half of them said they opted for an ARM because the introductory rate was lower than those on fixed-rate mortgages. And slightly more than half said they did so because they plan to refinance or sell their home before the rate starts to adjust.
But it’s important to note that there are no guarantees that rates will be lower, or that borrowers will be able to find a buyer for their home, when that fixed rate period is over. Some 58% of the borrowers who spoke to U.S. News said they’d had “hesitations” about taking out an ARM for exactly that reason.Read More