Homebuyers have several loan options. Hence, purchasing a new home has
never been easier. Individuals who cannot afford a down payment or
closing costs may take advantage of loan programs that offer assistance.
Furthermore, those hoping to obtain a low rate mortgage may consider a
loan with an adjustable rate. Because of the initial low cost of
adjustable rate mortgages, monthly mortgage payments are also lower. However,
low rate mortgages are short term. To avoid an interest rate hike,
homeowners should refinance before rates begin to increase.
Advantages of Adjustable Rate Mortgages
There are several advantages to accepting an adjustable mortgage. For
starters, a low rate mortgage allows buyers to purchase pricier homes,
while maintaining an affordable monthly payment. Moreover, because of
record low rates, homebuyers who obtain an adjustable rate mortgage can
enjoy falling rates without refinancing their mortgage. Thus, they avoid
closing costs and other fees.
Adjustable rate mortgages are also ideal for individuals who plan on
moving in a few years. Some people enjoy the stability of living in one
place for many years. In this case, refinancing for a fixed rate is a
wise choice. However, if you prefer the flexibility of moving every three
to five years, you will save money with an adjustable rate.
Pitfalls of Adjustable Rate Mortgages
While adjustable rates offer many attractive features, one major
drawback is that low rates are temporary. If interest rates continue to fall,
you will not be subjected to the dangers of these loans. However, if
rates begin to climb, so will your mortgage payment. Homebuyers who
cannot afford an increased mortgage are at risk of losing their home. Thus,
if your goal is to remain in your current home for many years,
refinancing for a fixed rate will offer predictable mortgage payments.
How Soon Can You Refinance a Mortgage?
Fortunately, home mortgage loans can be refinanced whenever you like.
Some lenders suggest allowing the loan to mature at least 12 months.
However, if you detect a change in market trends, refinancing shortly
after purchasing your home is a smart maneuver. Those contemplating
refinancing must be prepared to pay additional closing fees. Moreover, contact
your current lender and inquire of prepayment penalties.
Carrie Reeder offers advice about
Mortgage Refinance Loans Online.
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