If you are looking for your first new home and are reviewing mortgage materials, you might be wondering if you should sign up for a fixed rate mortgage or an adjustable rate mortgage. Which one makes the most sense?
A fixed rate mortgage means that your rates are fixed in place for the length of the mortgage. So, if you think that the rates that are being offered now are likely to be the best possible rates over the next few years, you would want to lock in at a fixed rate to take advantage of those lower percentages. Of course, if the interest rates drop drastically, there is nothing you can do, and you will be stuck paying the higher rates.
However, if you feel that the current rates are too high, and you have reason to believe that the interest rates will go down some time in the near future, then you might consider an adjustable rate mortgage, which lets you move with the market. But remember, if the market moves the other direction, the holder of an adjustable rate mortgage could find their rates and monthly payments skyrocketing out of control.
So which one is best? Call me today and I’ll help you decide based on your situation.