Is it a good time to get a 5 -year adjustable mortgage?
If you’re in the market to buy a house you have to be tempted to take advantage of the low rates for the 5 -year adjustable mortgage which is hovering at 3.75%.
When compared to the 30-year fixed currently at 4.75% the savings are big. Think of what you could do with the extra cash. You can save for a family vacation, put towards retirement, buy a new car, or the boat you’ve always dreamed of for fishing.
But, before you get too carried away there is a catch or maybe a better word would be draw back.
It’s called a 5-year adjustable because you will get to enjoy the low fixed rate for five years but then it will adjust after that to a higher rate based on the terms of the loan.
According to Inessa Weintraub a loan officer with Wells Fargo mortgage, “An adjustable rate is great for the homebuyer who plans on not owning the home for more than 5 years and wants to have lower payments. It is likely not suitable if you plan on owning the property long term.”
The 5 -year adjustable is a great option for the person looking to buy a second home and wants to reduce their payments. It’s important to mention that simply looking at the 5-year adjustable as a means to reduce your monthly payments is risky without factoring how long you will keep the property.
With the rates at an all time historic low, it might be best depending on your situation to pay the extra and get a 30 year fixed and have piece of mind.
What are your thoughts on adjustable rate mortgage in the current real estate market?