When choosing a mortgage loan, it’s important to choose the right mortgage loan that suits your financial situation. An adjustable rate mortgage and fixed rate mortgage are two popular mortgage loans. An adjustable rate mortgage can help you save money and complete the loan term in a shorter period of time. However, if you can’t keep up with the adjusting rate, then the adjustable-rate mortgage is not for you.
When Is an Adjustable-Rate Mortgage (ARM) a Smart Choice?
Benefits of Adjustable-Rate Mortgage(ARM's):
1. Flexible: Initially, the rate is fixed for 3 or 5 years, depending on the type of ARM. After 3 or 5 years, the interest rate varies.
2. Cheaper: When you calculate an Adjustable-Rate Mortgage (ARM) and Fixed-Rate Mortgage (FRM) using mortgage loan calculator, you may find ARM is cheaper than FRM.
3. Saves Money: If you’re likely to relocate in a few years, then there’s no point in paying extra money for the security of a 15, 20, or 30-year loan.
Things That Make an ARM the Smart Choice
For those people who relocate frequently, paying for a 15, 20, or 30-year FRM makes no sense. Many people need to relocate for various reasons.
Here are some circumstances that change housing needs:
- Relocation due to a new job.
- A larger home requirement for a growing family.
- Change in marital status.
- Change in career.
Essential Things to Keep in Mind Before Signing Any Loan Documents.
- Know you can afford the monthly payments.
- Plan how you’ll pay the loan if you or your spouse is out of a job.
- An adjustable rate mortgage might not offer sufficient savings for it to become the smartest choice. It depends on your income, down payment size, credit score, and the location of the home.
If you’re looking for a mortgage company in MA, Drew Mortgage Associates, Inc. can help! Drew Mortgage Associates, Inc. is a Boston mortgage lender that can help provide mortgage loans or refinance your loans that best fits your financial situation. Our professional home loan officers will guide you throughout the home loan process and assist you in completing the home loan application form. What are you waiting for? Contact Drew Mortgage Associates, Inc. today!