In addition to down payment assistance, which provides grant money to help cover the cost of the down payment, first time home buyers should also consider choosing a 5 year adjustable rate mortgage to obtain lower monthly payments.
The Mortgage Reports explains:
Are you paying more for your mortgage than you should be? If you’re like a lot of other first-time home buyers, it’s likely that you are.
And, fixing the problem could be as simple as choosing a new loan type.
As rents have climbed nationwide, mortgage rates have stayed low. According to Freddie Mac, 30-year conventional fixed rate mortgage rates have averaged below four percent since the start of the year; and rates for FHA and VA mortgage rates have averaged even lower.
For many buyers, though, the 30-year fixed rate mortgage is a wasteful choice. There are more logical, “less expensive” options to finance a new home.
An adjustable-rate mortgage (ARM), for example, can be a more suitable choice for a first-time buyer; and, for a buyer who intends to move or do a home refinance within the next 10 years.
ARMs offer lower mortgage rates than a fixed-rate loan and, sometimes, the savings is substantial.
The typical homeowner moves every 7 years. If you know you’re going to move, then, why pay extra for a 30-year loan?
What Is An Adjustable-Rate Mortgage (ARM)?
An adjustable-rate mortgage (ARM) is exactly what its name implies. It’s a mortgage for which the interest rate adjusts over the life of the loan.
However, rates don’t just adjust willy-nilly. The mortgage rates of an adjustable-rate loan are carefully controlled.
>> read the full article at themortgagereports.com