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ARMs get a makeover, but who should apply for them?

In the past few years, adjustable rate mortgages (ARMs) got socked as a bad thing, but lenders say it’s different now.

Back then, many of those loans had low, teaser rates for a year or two before ballooning, sometimes to double-digit rates.

Now, lenders say, some ARMs have more rational starter rates that last five or seven years before resetting.

Adjustable-rate mortgages often carry lower rates than fixed-rates mortgages, but which borrowers should consider such loans?

It might be suitable for someone who plans to move and sell before the rates adjust, but those who are staying for the long haul might not see a huge, financial bonanza, said Stephen Piazza, vice president of Michigan-based Quicken Loans, one of the nation's biggest lenders.

"It's too big of a risk," he said. "If you're at historic lows now and you know you're going to be in the house for 20 years, that's a lot to risk."

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