Adjustable Rate Mortgages
While the world is going crazy due to inflation and the rising home mortgage rates, we have been hard at work trying to find ways to help new home buyers get into a great home. When it comes to financing a home, there are multiple options that you can look into that works for your needs. One of those options is what’s called an adjustable rate mortgage.
Adjustable Rate Mortgage – Pros
When it comes to adjustable rate mortgages or ARMs, there are some pros and some cons. Let’s look at the pros first. The national average interest rate at the time of this posting is a little over 7% for a 30 year fixed. Getting into an ARM, you could be looking at 3-4% fixed interest rate for 7-10 years. The word adjustable comes in after the 7-10 years fixed time frame. So what that means is that, if you know that you won’t likely stay in that home past 6 years or so, your interest will not change in that time. That will have saved you hundreds and maybe at least one thousand dollars a month. Also, if the national APR drops to around what your current rate is anytime in that first 7 years, you can always go and refinance your home with a more traditional 30 year fixed loan.
Adjustable Rate Mortgage – cons
One of the main cons to getting an ARM, is that after the 7-10 years of being fixed, your rate will follow what the national average is. Every year your mortgage rate can change! This option is not the best choice for everyone, but it could help a lot of people get into their new home and save a lot of money every month.
If you are looking to get into your forever home, just remember that your rates will change down the road so plan accordingly. On the flip side, if you are a new home buyer or a growing family that knows you will upsizing or even downsizing in the next few years, an ARM might be perfect for you. If you work with a quality lender and real estate agent/team, they will help to make sure you don’t forget to do something before the fixed portion of the loan runs out. A lot of people are not aware of other options when it comes to financing a home and they lose out on a great home. Don’t let this be you!
If you have any questions on how ARMs work, please feel free to contact me and we can discuss what would best fit your needs. You can reach me at (406) 926-6767 or [email protected]