Adjustable-rate mortgages on the rise

While Bay Area homes for sale continue to their slow price decline, interest rates remain high and many buyers are choosing adjustable-rate mortgages instead of 30-year fixed rates. Nationwide, Zillow reports that 12 percent of all mortgage applications in July were for ARMs.

While adjustable-rate mortgages are considered risker than fixed rates, analysts say most buyers shouldn’t have to worry if rates rise as there are many more safeguards in place since the 2008 housing crash.

Most homebuyers are trying to ride out their initial term – usually 5 or 7 years – then refinance when fixed rates are lower.

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