Considering an adjustable rate mortgage? Be sure you fully understand the risks

Source: CNBC — 

When interest rates rise, it’s common for some homebuyers to explore whether an adjustable rate mortgage would make sense for them.

With an ARM, as it’s called, the appeal is its lower initial interest rate compared with a traditional 30-year fixed-rate mortgage. Yet down the road, that rate can change, and sometimes not to your benefit.

“There is a lot of variability in the specific terms as to how much the rates can go up and how quickly,” said certified financial planner David Mendels, director of planning at Creative Financial Concepts in New York.