Fixed rate vs. adjustable

long story. Fixed rates are more prevalent today because rates are so good. There are people who got adjustable rates years ago when rates were higher who are absolutely loving life now.....If you have a 3.50% fixed rate for 30 years, that is going to win out over a 2.75% rate that could go as high as 7.75% over the life of the loan with most people. Most people are not getting a straight ARM, they are getting something that is fixed for 3, 5 or 7 years and then becomes an adjustable after that. If you plan to be moving on before it adjusts, it is a great deal.Right now there is not a big enough spread on conforming loans to make it worthwhile but on larger Jumbo loans, it makes a lot more sense and saves a lot of money. A lot of Jumbo borrowers are taking the shorter term loans even if they think they may stay in the home forever. If you have the money to back it up then it is easier to gamble like that.Canadians and Brits hardly even have fixed rates, almost all loans are 3,5 or 7 years fixed and then adjustable. That is just the culture and they tend to pay off loans quicker than Americans. In Australia they have home loans that are like equity lines of credit and they are combined with the savings and checking account and they pay off loans much quicker and never worry what their rate is. We are able to offer these unique loans to American consumers now but Americans are scared to take them.In the end it is just a math problem. Look at the savings and the possible changes that can affect the adjustable rate loan and then evaluate what you expect to do and when and then you can decide if the risk outweighs the rewards or vice versa. A good loan officer should be able to help you do this.

Fixed rate loan are just that.. The principal and interest payments do not change throughout the life of the loan.. an ARM is adjustable based on the terms spelled out on the Note.. Some are adjustable from day one and change every month, but most are fixed for the first 3, 5, 7 10 years and then change based on indices.. Bottom line is this.. if you plan on being in your home for 10 years or more.. Just do a fixed rate mortgage.. if you know for sure you will be moving in 3 to 5 years.. Then doing a 3 or 5 year ARM would save you money.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Fixed = Stable and unchanging. Great comfort. Usually end up paying more in the long run for the comfort. Adjustable = Initial savings, with potential continued great savings, or increased payment. This needlessly scares many people, but if the adjustable is well understood, and used as a financial tool, not a way to buy a house you shouldn't be buying - they are awesome. Of course if you don't plan on living in the home more than 5 - 7 years, it is a no brainer. Why pay the higher rate of a fixed if you are likely to no longer have the loan? In MN or WI, click my name to the left, and contact me for a personal consultation.

Hi SMcClu_...,I believe both answers before mine are very good. What really matters are your personal financial goals. The benefit to a fixed rate mortgage with today's incredibly low rates is the ability to guarantee your rate in for a fixed period of time. Most people will buy a home and say this is the home I want to live in for the remainder of my life. However, just a few years later they decide to move. Could they have benefited from using an adjustable rate loan. Yes, however, they really did not know for sure how long they would live in their home. If you have a set exit strategy and it is short term you may want to explore an adjustable rate mortgage. However, if you are not totally sure you may opt for the safety of the fixed rate mortgage especially at today's low rates. One last note, if your not sure I would recommend that you do the fixed rate as it will protect you long term just in case you keep the mortgage. There is a lot to be said for peace of mind. Rates will be moving up again. Probably dramatically in the future. If you had to refinance later would you want to chance having to refinance in a much higher rate environment.Should you like to meet with someone in person and discuss your goals please feel free to call me at 603-543-3700 ext.1 Also, since the system does not provide your full name, if your name is Sandra please drop me a line. It has been many years since we spoke.Wishing you my very best!Don LaPlume

Today, my guidance would be to take an adjustable ONLY if you knew that you would be out of the property not more than one year past the fixed period. Fixed rates are so low, now, but will likely climb in the next few years. If you are still in the home one year past the first adjustment period, it is highly likely that the extra interest you pay on the second adjustment could eat up all your savings from the ARM. If you KNOW you will not be in this loan a year after the fixed period, then a gamble to take the lower interest may be worth it. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950