There may not be a wrong or right answer to the question above. Both options have their good and bad points. Before you even look at houses, you should take a few minutes to look into both and what they have to offer you and your family.
If you are planning on living in your new home for less than 5-7 years, an adjustable mortgage is absolutely worth considering. Starting you out at a lower interest rate can definitely save you some of your hard earned cash every month. An ARM (Adjustable Rate Mortgage) also will put you in consideration for a larger mortgage, thus allowing you to splurge on that larger home you are wanting. Take time to run the numbers through a mortgage calculator to see where the payments will end up.
However, ARM’s can definitely have a down side as well. After the honeymoon period is over, the interest rates can spike well over 10.00% over time. This can cause your once coveted dream rate to become your worst nightmare.
If you decide you want to play it safe, a fixed mortgage is right up your ally. Giving you complete control, you know exactly how much you will pay every month for the life of your loan. This allows you to budget your finances and plan for your future much more efficiently.
Although a fixed mortgage may be the simplest option, it could bring a little headache down the road. When rates have dropped and you are still stuck with your trusty rate for another 20 years, you may want to consider refinancing. This will require more paperwork and additional costs associated with appraisal and closing. You also will have no initial rate cuts as you would with an ARM.
Take time to run the numbers through a
mortgage calculator to see where the payments will end up. Your best option is to take an honest look at your budget and set a definite amount you don’t want to exceed. This will help when it comes time to pick out a beautiful home while keeping your feet planted firmly on the ground. Whether you decide an ARM or Fixed mortgage is best is pretty much just a personal preference.
Source: http://www.ArticlePros.com/author.php?David Kent
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