One downside of an adjustable-rate mortgage is that it is riskier than a fixed-rate mortgage. explain why.


Question: One downside of an adjustable-rate mortgage is that it is riskier than a fixed-rate mortgage. explain why.

Adjustable-rate mortgages (ARMs) are riskier than fixed-rate mortgages because their interest rates can fluctuate with changes in the market, making it difficult for borrowers to accurately predict future payments. This means that if interest rates rise, monthly payments will increase, potentially leading to financial strain for borrowers who may not be able to afford the higher payments. Conversely, if interest rates decrease, monthly payments may decrease, which can be beneficial for borrowers, but this unpredictability can make it challenging to plan and budget for long-term financial goals.


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