In a general sense, there is nothing wrong with an adjustable rate mortgage. But if you have heard cautionary tales, there is good reason. To add, this probably isn’t the best time to be looking at getting an ARM mortgage loan. I will discuss why and talk more about the differences between a fixed rate loan and an adjustable rate loan.
Back in 2006, I took out an ARM loan on the first home I purchased. The idea behind an ARM loan is that you can get a better introductory rate, and then as time goes by, the rate can fluctuate up and down. It is kind of a gamble, and truth be told, I didn’t get the best introductory rate because of my credit.
In the current market, you might have noticed that rates have been on the rise, consistently. In fact, I believe the FED has hiked interest rates three times in one year. That’s not good, but interest rates have been at historical lows for quite some time.
That being said, it makes more sense at the moment to lock in the best rate. Securing a low fixed rate mortgage is the best idea. If you were to do that, then you would be able to enjoy that rate, knowing that it would never go up on you.
There is something to be said about fixed rate mortgages under all circumstances. It’s nice having a conventional mortgage, and that is what I have with my condo. The rate is 5 percent, and I have just shy of 7 years left to pay on the mortgage.
Are you still interested in looking at ARM loans? I wouldn’t if I were you, but to each his own. You will have to make the decision about the type of home mortgage you want to get. If you get an adjustable rate mortgage, you just want to be sure that you are comfortable with the loan.
Have you already submitted a mortgage loan application or spoken to a mortgage broker? If so, it’s time to get down to the details. What interest rate are you going to be offered based on your credit? Remember that while the FED has been raising interest rates, they are still low. And when it comes to fixed rate mortgages, you have the choice of a 15 or 30 year loan. Which one is going to suit you best as you get ready to buy a home?