Last Wednesday, introduced Mia Taylor’s 1,850-word discussion of a question that many of today’s homebuyers may be pondering: “When is an adjustable-rate mortgage a good idea?” Just a year ago, when home loan interest rates were at historically low levels, the answer could have been dismissed more succinctly: “not now!

Adjustable-rate mortgages (ARMs) are commonly offered in five-, seven-, and 10-year increments. These are 30-year loans that attract borrowers with temporary “introductory” bargain rates. The title periods specify the number of years after which the rates reset to reflect a level closer to then-current rates.:

When interest rates are high, some borrowers decide that, since rates are likely to move lower before the introductory period ends, they will have the option at that time to refinance at the lower rates—a winning scenario. But ARMs have the reputation of moving in the opposite direction—increasing “typically between 2% to 5%, according to the CFPB.”

Author Taylor does a thorough job of detailing the pros and cons that affect today’s homebuyers—particularly concentrating on first-timers who are finding fixed-interest rate mortgages all but prohibitive. As January began, Costa Mesa ARM rates were between 5.5% and 6.16%, compared with standard 30-year fixed mortgages which started at around 6.6%. That level of difference can open one “pro” option: borrowers could choose to direct a portion of the saved money into paying down the loan’s principal “more aggressively.”

On the “con” side, risk is the leading factor—one that can carry an emotional as well as a financial downside. Particularly for those who are unsure of how long they will remain in the home, the possibility that they will be in place when rates reset could render them unable to afford increased monthly payments. There are rules moderating adjustments “so they won’t go from 3% to 7% overnight,” but even so, they can rise steadily each year until they reach a specified peak rate.

The final answer to when an ARM is a good idea is pretty much what you’d expect: a different one that varies for every individual’s situation and outlook. Your trusted financial advisor will have valuable insight into that answer, as will your experienced real estate professional—we hope that’s us!

We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976.  It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa  If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at



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