Adjustable rate mortgage can save you money
When buying a home, it is best to try and get an adjustable rate mortgage for lower payments and less paid in interest while you live there.
According to the National Association of Realtors, most people move every 5 – 7 years, which means that if you are buying a house now, chances are you could be moving in as little as 5 years from now.
An adjustable mortgage means that the rate and payments will be lower in the beginning, and then move up and down depending on the market. On the contrary, fixed/adjustable loans will remain fixed at a certain rate for several years and then start adjusting. It is also easier to qualify for adjustable mortgages.
Rates and payments on these loans are lower than 30 year or 15 year fixed mortgages so when you move, you will have paid a lower payment every month, and less interest, saving you money.
If you know or think that you will be moving in 5 years, getting a mortgage with a fixed rate for 5 – 7 years is advisable, because the for the first 5 or 7 years the payment will not increase.
It is also possible to buy a more expensive house with an adjustable rate mortgage than you could with a fixed rate mortgage and still have the same monthly payment.
So if you think you might be moving within the next 5 – 7 years, take advantage of the adjustable/fixed rate mortgage with a loan that is cheaper than a fixed rate loan, but fixed for the length of time you need it. You can get a bigger and better house without having to worry about the payments going up.
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