BiggerPockets Daily
1311 - Are Adjustable Rate Mortgages a Lifeline for Lower Rates? Or the Most Dangerous Thing You Could Do? By Jeff Vasishta
May 17, 2024
Famed financial guru Suze Orman discusses the pros and cons of adjustable rate mortgages (ARMs) and their role in the 2008 financial crisis. She explains why ARMs can be a lifeline for lower rates but also the risks involved. The podcast explores the history of ARMs, comparisons with fixed-rate mortgages, and valuable insights from financial experts on navigating the housing market.
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Quick takeaways
- Adjustable rate mortgages (ARMs) can benefit investors by offering lower rates and opportunities for refinancing or 1031 exchanges.
- When considering mortgage options, buyers should weigh the pros and cons, consider renting while investing, and take steps to optimize their financial position.
Deep dives
Benefits of Adjustable Rate Mortgages for Investors
Adjustable rate mortgages (ARMs) can be advantageous for investors, especially when the market conditions support it. Financial experts, such as the president of Ridge Lending Group, Kaylee Ridge, recommend ARMs if the rate is 0.5 to 1% lower than other options. With an average shelf life of five years for mortgages on rental properties, investors can benefit from the potential to refinance or conduct a 1031 exchange, making ARMs a strategic choice.
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