Just about everyone who comes into my office asks the same question. When I refinance, should I get a fixed or adjustable rate mortgage?
Since your home is about the most significant and important purchase you will make, that is a reasonable question to ask.
At first glance, fixed-rate mortgages seem like the best all around choice for most homeowners. Without fail you know what your payment is for the next 15, 20 or 30 years depending on the term of your loan.
But wait…. is it the best choice for you?
When you refinance, a fixed-rate loan may eliminate the risk of a rate increase down the road but that benefit can make a significant difference in your interest rate and payment amount. Homeowners who refinance with long term fixed rates pay between 1.00-2.00% higher than those who refinance with an ARM.
Homeowners who refinance to an adjustable rate mortgages may save thousands of dollars in interest and refinancing fees. Often times it’s a buyers only option to purchase a home.
The basics of an ARM (adjustable rate mortgage) are the same. You have a start rate which is lower than a fixed rate. At specified intervals...
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