Gambling on Adjustable Mortgages

An adjustable mortgage is essentially a bet on the future. The bet comes down to the amount of the monthly payment and total cost you will pay over the length of the loan. You get a lower initial interest rate with an adjustable mortgage and, thus, a lower monthly payment. You are then betting that the interest rates will not increase substantially during the period you have the mortgage. Adjustable mortgages are usually good choices for people buying homes they intend to keep for five to 10 years. Any longer period of time makes them very risky.  

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