What are the pros and cons of getting an Adjustable-Rate Mortgage?
When interest rates are high, many borrowers choose an adjustable rate mortgage. This option will keep your monthly payment lower as you start out in your new home. When interest rates are low, fixed rate mortgages will lock in that low rate over the life of the loan. If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you ll incur less interest expense for the short time you own the house.
In general, when interest rates are high, adjustable rate mortgages are more favorable to borrowers. When interest rates are low, fixed rate mortgages are better. Other pros and cons: Adjustable rate mortgages may be assumable; conventional fixed rate mortgages generally are not If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you’ll spend less money in interest expense for the short time you own the house. No one can predict the future. If interest rates suddenly rise and stay there, you risk higher monthly payments for a significant period of time with an adjustable loan. Conversely, in interest rates drop, you will benefit by having an adjustable rate loan.
When interest rates are high, many borrowers choose an adjustable rate mortgage. This option will keep your monthly payment lower as you start out in your new home. When interest rates are low, fixed rate mortgages will lock in that low rate over the life of the loan. Other pros and cons: • Adjustable rate mortgages may be assumable, conventional fixed rate mortgages usually are not. • If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you’ll incur less interest expense for the short time you own the house. • This decision should be thought out carefully. If interest rates rise you may have higher monthly payments for a significant period with an adjustable loan.
In general, when interest rates are high, adjustable rate mortgages are more favorable to borrowers. When interest rates are low, fixed rate mortgages are better. Other pros and cons: · Adjustable rate mortgages may be assumable; conventional fixed rate mortgages generally are not. · If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you’ll spend less money in interest expense for the short time you own the house. · No one can predict the future. If interest rates suddenly rise and stay there, you risk higher monthly payments for a significant period of time with an adjustable loan. Conversely, if interest rates drop, you will benefit by having an adjustable rate loan.
When interest rates are high, many borrowers choose an adjustable rate mortgage. This option will keep your monthly payment lower as you start out in your new home. When interest rates are low, fixed rate mortgages will lock in that low rate over the life of the loan. Other pros and cons: Adjustable rate mortgages may be assumable, conventional fixed rate mortgages usually are not. If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you ll incur less interest expense for the short time you own the house. This decision should be thought out carefully. If interest rates rise you may have higher monthly payments for a significant period with an adjustable loan.
