Adjustable-rate mortgages, or ARMs, can offer a lower initial interest rate—sometimes significantly lower than a fixed-rate loan. But they come with long-term uncertainty. At Corken + Company, we help clients weigh the pros and cons so you can choose a loan that aligns with your goals, timeline, and financial comfort.
What Is an Adjustable-Rate Mortgage
An ARM starts with a fixed rate for a set period—typically 3, 5, 7, or 10 years—then adjusts periodically based on a market index plus a lender margin . For example, a 5/1 ARM means a fixed rate for five years, then annual adjustments. The initial rate is usually lower than a comparable 30-year fixed .
Benefits of Choosing an ARM
• Lower starting rate frees up cash for other priorities
• Ideal for short‑term stays—if you plan to sell or refinance before rate adjustments begin
• Caps provide some protection—limits on annual and lifetime rate increases prevent runaway payments
Risks to Keep in Mind
• Rate risk and payment increases may occur after the fixed period
• Potential “payment shock”—your monthly payment could jump significantly if rates rise sharply
• Negative amortization risk—if you’re on an interest-only or minimum payment ARM, you could end up owing more if you’re not paying down principal
Is an ARM Right for You?
Consider these key questions:
• How long will you stay in the home?
If you’ll own for less than the fixed period, an ARM often makes sense .
• How flexible is your budget?
You need room to absorb small rate increases—or a plan to refinance before bigger ones.
• Do you understand the caps?
Caps limit yearly and lifetime adjustments. Asking about caps is vital to avoid unwelcome surprises .
How Corken + Company Helps
We work with top lenders to curate ARM options tailored to your timeline and risk tolerance. We make sure you understand:
• Fixed–adjustment schedule
• Rate caps
• Refinance or sale timelines
• Carry costs and budget impact
We also overlay this financing plan onto your home search and negotiation strategy—so you’re not just chasing lowest rates, you’re locking in a rate structure that supports your broader goals.
If you’re considering an ARM, we can help model different scenarios, structure your purchase for success, and guide you toward the option that fits your life—not just your loan.
Get in touch at www.corken.co or call 303‑858‑8003
Corken + Company | Real Estate Solutions Without Limits
