In most situations, home buyers looking to get fixed home mortgages as your interest rate is locked in for a specific period of time (usually 15 years or 30 years). It is great to be able to budget yourself and know exactly how much your mortgage will cost each month.
Now though, with interest rates jumping up much higher, compared to recent years, many homebuyers are looking to find ways to still get the benefits of homeownership without “breaking the bank.”
One way to do that is with an adjustable-rate mortgage or ARM. With it, your interest rate will change over time which will also change your monthly payment. Most ARMs though will stay fixed for a certain period of time, such as 5 or 10 years.
Right now, ARMs are lower than fixed-rate mortgages which allows more homebuyers to qualify for a loan as the rates are lower. This gives a buyer time to pay off the loan, sell the home for a profit or refinance once the fixed terms of the arm ends.
While an adjustable-rate rate mortgage isn’t for everyone, it may be a good alternative for those in the housing market looking to get a mortgage they can get approved for and can afford.
Should you have any questions on adjustable-rate mortgages please feel free to contact us at Alliant Title & Escrow. We would be happy to help and look forward to seeing you at the closing table!