August 19, 2025 • 7 mins
Amy talks with the host of ‘How to Money’ Joel Larsgaard about ARMS making a comeback and Gen Z not knowing anything about their credit score.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Let's say good morning now to the host of How
to Money on KFI. It's Joel lars Guard Morning.
Speaker 2 (00:04):
Joel, morning Amy.
Speaker 1 (00:06):
Okay, so your new mortgage might cost you an ARM.
Speaker 2 (00:10):
Your jokes so good.
Speaker 1 (00:11):
I love it.
Speaker 2 (00:12):
I love the lead in here, and I'm a dad,
so I can sympathize with the dad jokes. I have
so many in my reports wire. But yeah, so this
interesting to see that adjustable rate mortgages arms are making
a comeback. And so we've actually seen a pretty substantial
increase in the amount of people being interested in and
applying for an ARM instead of a fixed rate mortgage.
(00:35):
And I know there's a lot of people in the
personal finance space who would say, are you kidding me? Like,
think about adjustable rate mortgages back in the early two
thousands and how destructive they were to individuals and then
to the economy as a whole. But I will say this,
arms are not created like they were back then, And
(00:56):
whether or not an ARM makes sense comes down to
a bunch of different diferent details in your life and
the home you're buying, and what you would do with
the money you'd be saving, and how big the differences
and interest rates between the adjustable rate mortgage and a
fixed rate mortgage. But I'm not one of those people
who says that all adjustable rate mortgages are bad. But
(01:16):
I will say right now, when you look at the data,
it does seem like interest rates between adjustable rate mortgages
and fixed rate mortgages are pretty close to each other,
and usually it doesn't make sense unless there's a wider
gap to go for an adjustable rate mortgage.
Speaker 1 (01:31):
Okay, so why might somebody go for an adjustable rate mortgage, Because,
like you said, they're sort of making a resurgence. I
haven't heard much about them in recent years, so we
might not know what exactly they do.
Speaker 2 (01:42):
Sure, so the big thing, the reason people go with
an adjustable rate mortgage is because they can get a
lower rate and so instead of like, for instance, huh yeah, exactly.
To start, So, the last home I purchased, I got
a ten to one ARM and it was the first
time I'd ever gotten an adjustable rate mortgage. And the
big reason it was because I was going to save
more than one percent in interest to go with the
(02:05):
ARM instead of the fixed rate mortgage. And I knew
that over the next ten years, I would be paying
more towards principle because of the lower interest rate, I
would have more savings that I could toss into throw
at the principle of the home if I wanted, I
could pay down that mortgage more quickly. Knowing that there's
a chance that there's a risk, right that my interest
rate will go up after ten years, and so you
(02:27):
have to know that and look at the terms. There
are five one arms, seven one arms, like seven six arms,
so all the details really matter about when your rate
can adjust how much it can go up. Typically it's
like once that fixed rate period is done, they can
bump up by two percent a year up to a
max of five percent. So the savings have to be
significant I think over a fixed rate mortgage to make sense.
(02:50):
The other reason people out for an adjustable rate mortgage
AMY is because they're not going to be in that
home for very long. So the average person is now
in a home for about twelve years. But let's say
you are going to be in a home you're like,
it's probably a five year home, maybe an eight year home,
ten year home at max. Well, then really a ten
to one arm shouldn't worry you nearly as much and
you should just take the savings. So you really have
(03:13):
to think about that kind of stuff too. If you're like,
this is my forever home and I'm too nervous, I'm
too much of a nervous nelly to worry about those
upward rate adjustments, then you know, go for the fixed
rate mortgage. But I think the biggest thing here when
we're talking about mortgages is comparing with different lenders, and
that's the thing that people don't do, like we're more
than willing to do. You know, some shopping we're online
(03:35):
and say, well does another store have this cheaper? But
if we shop for mortgages with a credit union, with
a local bank, with a mortgage broker, if we shop
in multiple with multiple areas, that's how we're going to
save the most. So yeah, I think the arm and
fixed rate debate is really important, and it's important to
consider both and look at the differences. But what's even
more important is to get multiple quotes on different kinds
(03:56):
of mortgages from different lenders.
Speaker 1 (03:57):
Okay, that sounds like wonderful. I know the first house
I had, I had the adjustable rate and it worked
out great for me. But like you said, you got
to kind of be cognizant of where you are, how
long you're going to have it, what your terms are,
and all that stuff. So just yeah, know what you're
doing before you do it. So there is a whole
generation that's not paying attention to their credit.
Speaker 2 (04:18):
Okay, So when I first saw this, this new USAA
report about gen z not knowing anything about how their
credit score is made up, I was like, oh gosh,
this is not good. Another generation who's just not prepared
to live within the credit scoring system that has kind
of been set up that we're all essentially forced into.
(04:39):
There's just no way out of Equifax experience and TransUnion
having a certain amount of data on us about our
debts and how we borrow so that they can come
with the score so they can sell it to different lenders.
This is just the water we swim and it's the
world we live in. But then I thought about it
for a second and I was like, wait a second.
Gen Zers are as young as age thirteen, and so
(05:00):
when I thought about these stats, something like one in
five have never checked their credit score, I'm like, it
makes sense. When I was thirteen, I wasn't checking my
credit score either, So From that standpoint, I'm like, hey,
gen Z, you're probably doing fine. You'll learn about credit
scores eventually. But if you're in the upper age range
of gen z Ers, or really even if you're older
than that, and you're like, no, I find myself in
(05:21):
that category, I don't really know what makes up a
credit score, and so if you don't know how it's made,
there's a better chance that your score is not doing
so hot. And then when you do go try to
take out a mortgage, or you do try to go
take out a car loan, or you do try to
go rent an apartment, you're gonna get worse terms, or
you might even get denied for the thing that you
(05:42):
want because you haven't paid attention. So I think it's
really important to look into the details. It's like a
pie chart. There's a handful of things that make up
your credit score and that impact your credit report, like
paying on time. Another huge one is your credit utilization ratio,
which is like how much overall credit do you have
in your name and how much of it are you using?
(06:04):
And so people make just simple mistakes because they don't
know how the credit score pie is made up, and
then they end up doing something like canceling a credit card,
lowering their overall credit limit, harming their utilization rate, and
those are the kind of things that I don't want
to see. I want people to know how the sausage
is made so then they can, you know, act accordingly.
Speaker 1 (06:23):
Yeah. I think I got my first credit card when
I was like eighteen, right before I went off to college.
And like that was my parents where they were like,
you need to start building that credit score now, and
you know, they taught me about it. So hopefully parents
will step in and help those kids.
Speaker 2 (06:37):
I do think, yeah, it's a parent, that's great. Yeah,
but parents have to know too, and so you can
look up pretty easily. You know. We've got content at
how toomoney dot com helping you understand what a credit
score looks like, what it's made up of, and how
you can change it. There's also a great site called
credit karma dot com. You can log in, there's like
a scorecard and they'll basically say, hey, you're getting an
A in this part of your credit score, but you're
(06:59):
kind of getting a c overheat. You can improve it
by doing this and this. They will try to pitch
you credit cards and stuff like that, so you might
want to move on past that if you're not interested.
But I love that, like the scorecard, and then saying great,
now I've got the power. I can kind of see
where I'm making mistakes, so I can change.
Speaker 1 (07:14):
All right. The host of Hout of Money on KFI
is Joel Larsgard. You can hear him every Sunday from
noon to two. You can follow him at how to
Money Joel, And thank you as always for the wonderful
financial advice.
Speaker 2 (07:26):
Of course, thanks for having me.
Speaker 1 (07:27):
All right, we'll talk to you next week
Let's say good morning now to the host of How
to Money on KFI. It's Joel lars Guard Morning.
Speaker 2 (00:04):
Joel, morning Amy.
Speaker 1 (00:06):
Okay, so your new mortgage might cost you an ARM.
Speaker 2 (00:10):
Your jokes so good.
Speaker 1 (00:11):
I love it.
Speaker 2 (00:12):
I love the lead in here, and I'm a dad,
so I can sympathize with the dad jokes. I have
so many in my reports wire. But yeah, so this
interesting to see that adjustable rate mortgages arms are making
a comeback. And so we've actually seen a pretty substantial
increase in the amount of people being interested in and
applying for an ARM instead of a fixed rate mortgage.
(00:35):
And I know there's a lot of people in the
personal finance space who would say, are you kidding me? Like,
think about adjustable rate mortgages back in the early two
thousands and how destructive they were to individuals and then
to the economy as a whole. But I will say this,
arms are not created like they were back then, And
(00:56):
whether or not an ARM makes sense comes down to
a bunch of different diferent details in your life and
the home you're buying, and what you would do with
the money you'd be saving, and how big the differences
and interest rates between the adjustable rate mortgage and a
fixed rate mortgage. But I'm not one of those people
who says that all adjustable rate mortgages are bad. But
(01:16):
I will say right now, when you look at the data,
it does seem like interest rates between adjustable rate mortgages
and fixed rate mortgages are pretty close to each other,
and usually it doesn't make sense unless there's a wider
gap to go for an adjustable rate mortgage.
Speaker 1 (01:31):
Okay, so why might somebody go for an adjustable rate mortgage, Because,
like you said, they're sort of making a resurgence. I
haven't heard much about them in recent years, so we
might not know what exactly they do.
Speaker 2 (01:42):
Sure, so the big thing, the reason people go with
an adjustable rate mortgage is because they can get a
lower rate and so instead of like, for instance, huh yeah, exactly.
To start, So, the last home I purchased, I got
a ten to one ARM and it was the first
time I'd ever gotten an adjustable rate mortgage. And the
big reason it was because I was going to save
more than one percent in interest to go with the
(02:05):
ARM instead of the fixed rate mortgage. And I knew
that over the next ten years, I would be paying
more towards principle because of the lower interest rate, I
would have more savings that I could toss into throw
at the principle of the home if I wanted, I
could pay down that mortgage more quickly. Knowing that there's
a chance that there's a risk, right that my interest
rate will go up after ten years, and so you
(02:27):
have to know that and look at the terms. There
are five one arms, seven one arms, like seven six arms,
so all the details really matter about when your rate
can adjust how much it can go up. Typically it's
like once that fixed rate period is done, they can
bump up by two percent a year up to a
max of five percent. So the savings have to be
significant I think over a fixed rate mortgage to make sense.
(02:50):
The other reason people out for an adjustable rate mortgage
AMY is because they're not going to be in that
home for very long. So the average person is now
in a home for about twelve years. But let's say
you are going to be in a home you're like,
it's probably a five year home, maybe an eight year home,
ten year home at max. Well, then really a ten
to one arm shouldn't worry you nearly as much and
you should just take the savings. So you really have
(03:13):
to think about that kind of stuff too. If you're like,
this is my forever home and I'm too nervous, I'm
too much of a nervous nelly to worry about those
upward rate adjustments, then you know, go for the fixed
rate mortgage. But I think the biggest thing here when
we're talking about mortgages is comparing with different lenders, and
that's the thing that people don't do, like we're more
than willing to do. You know, some shopping we're online
(03:35):
and say, well does another store have this cheaper? But
if we shop for mortgages with a credit union, with
a local bank, with a mortgage broker, if we shop
in multiple with multiple areas, that's how we're going to
save the most. So yeah, I think the arm and
fixed rate debate is really important, and it's important to
consider both and look at the differences. But what's even
more important is to get multiple quotes on different kinds
(03:56):
of mortgages from different lenders.
Speaker 1 (03:57):
Okay, that sounds like wonderful. I know the first house
I had, I had the adjustable rate and it worked
out great for me. But like you said, you got
to kind of be cognizant of where you are, how
long you're going to have it, what your terms are,
and all that stuff. So just yeah, know what you're
doing before you do it. So there is a whole
generation that's not paying attention to their credit.
Speaker 2 (04:18):
Okay, So when I first saw this, this new USAA
report about gen z not knowing anything about how their
credit score is made up, I was like, oh gosh,
this is not good. Another generation who's just not prepared
to live within the credit scoring system that has kind
of been set up that we're all essentially forced into.
(04:39):
There's just no way out of Equifax experience and TransUnion
having a certain amount of data on us about our
debts and how we borrow so that they can come
with the score so they can sell it to different lenders.
This is just the water we swim and it's the
world we live in. But then I thought about it
for a second and I was like, wait a second.
Gen Zers are as young as age thirteen, and so
(05:00):
when I thought about these stats, something like one in
five have never checked their credit score, I'm like, it
makes sense. When I was thirteen, I wasn't checking my
credit score either, So From that standpoint, I'm like, hey,
gen Z, you're probably doing fine. You'll learn about credit
scores eventually. But if you're in the upper age range
of gen z Ers, or really even if you're older
than that, and you're like, no, I find myself in
(05:21):
that category, I don't really know what makes up a
credit score, and so if you don't know how it's made,
there's a better chance that your score is not doing
so hot. And then when you do go try to
take out a mortgage, or you do try to go
take out a car loan, or you do try to
go rent an apartment, you're gonna get worse terms, or
you might even get denied for the thing that you
(05:42):
want because you haven't paid attention. So I think it's
really important to look into the details. It's like a
pie chart. There's a handful of things that make up
your credit score and that impact your credit report, like
paying on time. Another huge one is your credit utilization ratio,
which is like how much overall credit do you have
in your name and how much of it are you using?
(06:04):
And so people make just simple mistakes because they don't
know how the credit score pie is made up, and
then they end up doing something like canceling a credit card,
lowering their overall credit limit, harming their utilization rate, and
those are the kind of things that I don't want
to see. I want people to know how the sausage
is made so then they can, you know, act accordingly.
Speaker 1 (06:23):
Yeah. I think I got my first credit card when
I was like eighteen, right before I went off to college.
And like that was my parents where they were like,
you need to start building that credit score now, and
you know, they taught me about it. So hopefully parents
will step in and help those kids.
Speaker 2 (06:37):
I do think, yeah, it's a parent, that's great. Yeah,
but parents have to know too, and so you can
look up pretty easily. You know. We've got content at
how toomoney dot com helping you understand what a credit
score looks like, what it's made up of, and how
you can change it. There's also a great site called
credit karma dot com. You can log in, there's like
a scorecard and they'll basically say, hey, you're getting an
A in this part of your credit score, but you're
(06:59):
kind of getting a c overheat. You can improve it
by doing this and this. They will try to pitch
you credit cards and stuff like that, so you might
want to move on past that if you're not interested.
But I love that, like the scorecard, and then saying great,
now I've got the power. I can kind of see
where I'm making mistakes, so I can change.
Speaker 1 (07:14):
All right. The host of Hout of Money on KFI
is Joel Larsgard. You can hear him every Sunday from
noon to two. You can follow him at how to
Money Joel, And thank you as always for the wonderful
financial advice.
Speaker 2 (07:26):
Of course, thanks for having me.
Speaker 1 (07:27):
All right, we'll talk to you next week
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