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Should I Take a Adjustable Rate or Fixed Rate Mortgage

 
 
rogers
 
Reply Tue 27 May, 2014 11:11 pm
Which one is better, an Adjustable Rate Mortgage or a Fixed Rate Mortgage?
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Type: Question • Score: 4 • Views: 1,548 • Replies: 10

 
roger
 
  5  
Reply Tue 27 May, 2014 11:26 pm
@rogers,
Fixed. Interest is still at a nearly all time low and the only adjustment you are likely to see is upward.
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Linkat
 
  1  
Reply Wed 28 May, 2014 11:30 am
@rogers,
Depends - adjustable only if you plan on paying off the loan before the next adjustment period. For example we once re-financed with a 5 year adjustable loan. We planned on selling on how in about 5 years so it made sense to get the lower interest rate.

However, if you plan on staying in your home or not paying off within the adjustable period, with interest rates as low as they are now, it is highly likely the rates will increase. In this case, you would get a lower rate, but it will be short term. It could even increase to an amount that would be higher than the current fixed rate amount. In the long run, for most people, a fixed rate is a better option when interest rates are currently very low.
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cicerone imposter
 
  1  
Reply Wed 28 May, 2014 07:41 pm
@rogers,
Both answers applies.
I agree with rogers that interest rates can only go up in the future.

I agree with Linkat about when you plan to sell the property; most pundits say the cut-off is five years.

Just don't forget that there's a cost to refinance.
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BonnieArteaga
 
  1  
Reply Tue 7 Oct, 2014 04:28 am
@rogers,
Both have their own individual pros and cons and are effective in their individual places.
Adjustable rate mortgage or ARMs can be very effective for home buyers, as well as they carry a degree of uncertainty where as fixed rate mortgage can offer rate and payment security but they can be more expensive.
So, its depends upon you that which mortgage you want and for which purpose.
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Glennjacobs
 
  -1  
Reply Tue 18 Nov, 2014 04:16 am
i think Adjustable-rate mortgages is a good option.
some advantages of Adjustable-rate mortgages are:
1. Feature lower charges and expenses early on in the loan term. Because creditors can use the cheaper payment when determining borrowers, persons can buy larger sized homes than they in any other case could buy.
2. Enable borrowers to get benefits of dropping prices without re-financing. Rather of having to pay a entire new set of ending costs and fees, ARM borrowers just stay back and look at the rates and their monthly expenses fall.
3. Assist borrowers save and spend more funds. Somebody who has a payment that's $100 less with an ARM will save that funds and make more off it in a higher-yielding investment decision.
4. Provide a inexpensive way for borrowers who don't plan on residing in one place for very long to buy a home.
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BonnieArteaga
 
  0  
Reply Thu 20 Nov, 2014 12:55 am
If you are selecting an adjustable rate mortgage, then the initial fixed rate is lower than that of a comparable fixed-rate mortgage.
So an adjustable rate mortgage is good.
roger
 
  2  
Reply Thu 20 Nov, 2014 01:22 pm
@BonnieArteaga,
Of course, if you get into an adjustable rate when interest rates are extremely low, you already know which way that adjustment is going to go.
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RonaldHarris
 
  1  
Reply Mon 24 Nov, 2014 05:12 am
Fixed rate mortgage is a better choice. A fixed-rate mortgage charges a set rate of interest that doesn't change all over the life of the loan. Although the amount of money of principal and interest paid each month may differ from payment to payment, the total payment continues to be the same, which enables budgeting simple for homeowners.
cicerone imposter
 
  1  
Reply Mon 24 Nov, 2014 12:28 pm
@RonaldHarris,
So true, but there are other considerations that should be taken into account such as length of loan, and both weighed against other personal factors. Job security, anticipated wage increase/decrease, and length of time in the home.
roger
 
  1  
Reply Mon 24 Nov, 2014 03:15 pm
@cicerone imposter,
Un huh. Conventional wisdom has it that ARM can be good if you anticipate selling the house within five years. Obviously, there are variables.
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