Question about Adjustable Rate Mortgages
We received a question about adjustable rate mortgages from a reader and will answer his questions in our next post. He currently has a fixed rate mortgage and will be renewing the mortgage in the near future when it matures. He wants to know if he should change to an adjustable rate mortgage instead of just renewing with a fixed rate mortgage. What are the costs and savings opportunities associated with each? These are pretty typical questions that many homeowners are interested in. It is a complicated process for many people and they can use all the help they can get.
Question to Debt Counselor:: Adjustable Rate Mortgages
I have a question about adjustable rate mortgages. We are going to be renewing our current mortgage which was a fixed rate mortgage for the past 5 years and we are wondering if we should switch to an adjustable rate mortgage. The interest rate is lower than the fixed rate mortgage, so we would save a lot of money by moving to this type of mortgage.
Our current mortgage holder offers both types of mortgages and we can select either type of mortgage at this time with no penalty what so ever. If the interest rate stays the same for the next five years, selecting an adjustable rate mortgage will save us a great deal of money. If the rates do up as everyone seems to be predicting, our adjustable rate mortgage will also go up and it could go higher than the fixed mortgage rate that is currently being offered.
We are really not sure what to do about this decision and have been spending nights thinking about this issue wondering what to do.
Do you currently have a mortgage? :: Yes, with 15 years left based on fixed term interest rate
Home/Mortgage Loan Amount :: $65,000
Other Loans, Including Credit Cards:: None, all credit cards are fully paid each month
Are you employed and for how long:: yes, for the past 10 years with the same firm
Your credit rating to be – excellent, fair, or bad? :: Excellent
Gross Amount Per Paycheck :: $2500 every two weeks
Do you agree to have this information published online, without your PRIVATE information of course? :: yes
Extra information here please (some detail)::
We understand that the interest rate can change. But we are not sure how much they will change, so if you can help in this area as well, that would be a great help. Is there a risk of really high rates and as a result high payments too?
Both my wife and I work, and we do not anticipate any problem renewing our mortgage, regardless of what type we choose, however we are really looking for some guidance regarding which one to select and which one will save us the most money. We want to make our decision and really forget about our mortgage for the next 5 years. All we want to do is make all of the monthly payments.
If you have a question about debt, loans , mortgages or other financial situations, please feel free to leave a comment. Provide as much detail about your situation as you can. We will try to answer your question in our next post.
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July 30th, 2012 at 5:20 pm
adjustable rate mortgages are great while interest rates are headed down, or are stable, but when they start going up, you may want to lock into a fixed rate mortgage to protect yourself from high interest rates.