The 5 Year ARM Helps First Time Buyers Obtain Lower Monthly Payments

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


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