The toughest thing about today’s market is that a month ago you may have been pre-approved for $800,000 but because of rising interest rates, today you might only be able to afford $750,000 today.
With over 80% of homeowners opting to go with a 30yr fixed rate mortgage, it’s definitely the safe bet.
Your payments stay the same and you can feel secure for the next three decades. But what if you plan on moving in 5-7 years… Is there a loan you can take advantage of that has a lower rate?
This is when it’s worth talking to a lender about an Adjustable Rate Mortgage (ARM).
Many lenders will offer a 7yr ARM loan. The rates are fixed for the first 7 years, and then will fluctuate depending on the state of the economy and the general cost to borrow money.
This could be considered risky if you plan on staying in the home for MORE than 7 years. But what if you plan moving or selling within those 7 years?
The fixed period, or the first 7 years, is usually offered at quite a lower interest rate.
Nowadays, you can get about 1.0 – 1.5% lower on the first 7 years compared to a 30yr fixed.
If you’re thinking of buying in today’s market, talk to a lender to see if an ARM loan is the right fit.