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So, who might use an ARM? For starters, if you are purchasing a house for investment purposes and plan to sell it quickly, you might take advantage of low interest rates by getting this type of loan—particularly if it looks as if they may go lower. Another reason to use an ARM as a home loan is if you are buying a home in a time when interest rates are on decline. You can take out an ARM, and then change it to a fixed loan once interest rates bottom out.
With this type of loan, you will make monthly payments for a fixed amount of time, with a fixed interest rate. The difference is that at end of payment schedule, you will owe unpaid balance in one lump sum. If you use a balloon mortgage, you will find that interest rates are much lower than either a fixed rate mortgage or an ARM.
The obvious negative to this type of loan is that huge payment due at end, but if you are planning to hold house for a short period of time, then this might be loan for you.
By understanding various types of home loans that are available to you, you will be better prepared to make a decision that is just right for you and your family.
To see a list of recommended mortgage loan companies online, visit this page: http://www.abcloanguide.com/mortgageloans.shtml - Carrie Reeder is the owner of ABC Loan Guide, an informational website with articles and more about various types of loans.