What is a potential downside of adjustable-rate mortgages for borrowers?

The potential downside of adjustable-rate mortgages for borrowers lies in the fact that they might face difficulty making payments if the rate increases. Typically, adjustable-rate mortgages start with a lower initial interest rate that is fixed for a certain period. However, once this period ends, the rate can fluctuate based on market conditions. If interest rates rise, the borrower's monthly payments will increase accordingly. This can lead to financial strain, particularly if the borrower has not planned for these potential increases or if their financial situation changes. It's essential for borrowers to be aware of this risk when considering an adjustable-rate mortgage, as it introduces uncertainty into their long-term financial planning.

The other choices refer to characteristics that, while important, don't highlight the critical risk associated with adjustable rates. Lower initial payments can be advantageous, but they are part of the appeal rather than a downside. The notion that adjustable-rate mortgages could be more expensive overall compared to fixed-rate mortgages is not universally true, as the total cost depends on market conditions and the duration of the mortgage. Additionally, stating that borrowers cannot refinance during the fixed-rate period does not accurately reflect the flexibility many borrowers have; refinancing options are often still open, depending on the lender’s terms and market conditions. Thus, the primary concern remains