The adjustable-rate mortgage is the mortgage without a fixed interest rate. The interest varies as the benchmark of interest rates changes. This is opposed to a Fixed Rate Mortgage where the interest is fixed and does not change for the duration of the mortgage. Keep in mind that you will start with the Fixed Rate Mortgage for a few years and change to ARM later.
Should I use the Adjustable Rate Mortgage?
It depends on what your priorities are on your investment goals. If your goals are saving money by paying less on the interest, the ARM will be a good choice.
As an investor, you must predict the future trend of the interest rate. If the rate becomes lower as you predicted, you will pay less on the interest.
However, if the rate moves in the opposite direction; you will end up paying more money on the rate and your monthly payments will be higher.
On the other hand, if the stability of your monthly payment is important for you, then these mortgages will not be a good fit. Instead, you can go with the Fixed Rate Mortgage where your interest rates are fixed for the duration of your mortgage.
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