 TITLE: What Is an Adjustable-Rate Mortgage? CONTENT: Are There Risks When Using an Adjustable-Rate Mortgage?\n-------------------------------------------------------\nThe primary risk of an ARM is that your monthly payment can increase after the initial fixed-rate period. Depending on the size of the adjustment that first year, you may still come out ahead with an ARM after the initial period.\nBut remember that the interest rate can be adjusted in the following years as well, up to a maximum rate cap. If interest rates continue to rise, you could end up paying a lot more in interest than if you had chosen a fixed-rate mortgage initially.\nRefinancing into a fixed-rate mortgage is always an option. Keep in mind, though, that if your ARM rate has moved higher, it's likely that fixed-rate mortgage rates will also be higher than when you first took out your loan.\nEven so, it's possible that you might not qualify to refinance at all. When you apply for a refinance loan, lenders will evaluate your current situation, not the situation when you first bought the house.\nYour credit scores will once again be a major factor in whether you qualify, and in the loan terms you are offered. What's more, if the value of your home or your income has declined, you may not be able to qualify for a refinance. END