Most home buyers today opt for fixed-rate home loans. With consistent monthly principal and interest payments, it’s an ideal choice if you plan to stay in your home seven years or longer. But if you’re planning on staying put for less time than that, an ARM could be a good option for you.
With an adjustable-rate loan, you also get a fixed rate, but only for a set number of years — typically 3, 5, 7 or 10 years — before the mortgage adjusts annually based on a particular index. With an ARM, your introductory rate is typically lower than the rate you would get with a fixed-rate loan. But with an ARM, you run the risk of a higher mortgage rate once the fixed-rate period is over and the rate adjusts.
While fixed-rate mortgages often make sense for people who plan to live in their home for seven years or longer, adjustable-rate loans can be a good choice for home buyers who are planning to sell or refinance their homes before their rate adjusts. Questions? We have offices in 49 states. Give us a call at 844-500-2845.