Do you need to get a mortgage for your home, and you are debating about what kind of mortgage you should get? If so, you may be tempted by getting an adjustable-rate mortgage. Here are some things you should know about an adjustable-rate mortgage.
Will You Save Money By Getting An Adjustable Rate Mortgage?
One of the reasons that people choose an adjustable-rate mortgage is because of the cost savings. After all, the goal is to save as much money as possible over the length of the mortgage and pay very little interest. The amount of money that you save will ultimately be affected by the initial interest rate that you get and how long you plan to stay in the home.
Adjustable-rate mortgages usually have terms of a few years before the rate starts to change. During that initial term, you can receive an interest rate that may be lower than a typical 15 or 30-year mortgage. However, the rate can adjust after the initial term and may end up being higher than what a 15 or 30-year fixed-rate mortgage would be. That means that if you plan on selling the home within 3 years before the rate changes, you could end up saving a bunch of money that you would have otherwise paid in interest.
Can You Get An Adjustable Rate Mortgage With A Jumbo Loan?
If you are buying a home that qualifies for a jumbo loan due to its high cost, you likely want to know if the home will qualify for an adjustable-rate mortgage. Every lender is different, but it is possible that you can find one that will offer you an adjustable-rate mortgage for a high loan value. If not, there may be ways to get the cost of the loan down to qualify for a normal adjustable-rate mortgage, such as providing a larger down payment.
What Can You Do If The Rate After The Fixed Period Is Too Much?
It's possible that the initial term of the adjustable-rate mortgage will finish and you'll want to secure a lower interest rate to get back those low monthly payments. You always have the option to refinance to a different type of loan product. You could transition to a 30-year fixed mortgage if necessary, which will have lower payment amounts spread out over a longer period of time. Contact a company, such as Choice Mortgage, for more information.
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