Are you concerned about escalating interest rates? Has your ability to buy more in a house diminished because of an increase in the rates? Why don’t you consider an adjustable rate mortgage?
The good news is that there is at least one local lender in town who is offering a 10-year adjustable rate mortgage. It provides a bit more security for the buyer as the rate is fixed for 10 years. So, if you have been a bit skeptical about an adjustable rate, this might be a great option for you.
Recently, a buyer client purchased a home with a 10-year fixed adjustable rate at 3.875%! He’s locked in for ten years and is saving hundreds of dollars on his monthly payment. The rate adjusts after the tenth year and there is a lifetime cap of 5%. A lot can happen in ten years, so it’s a pretty safe bet. Nationally, homes turn over approximately every seven years. But, even if you plan on keeping your home beyond the ten year mark, it’s likely your income will be better or that you will have an opportunity to refinance at a lower fixed rate. Most importantly, buying a home with an adjustable rate mortgage may be the difference in making your dream come true.
What You Should Know
There are some things you should know. For example, you may need to pay more in points. In the case above, the buyer paid 2.125% to buy down the rate. It still made sense given the savings. If you have good credit scores, i.e., scores of 780 or above, you’ll secure the best rates. Also, there is NO pre-payment penalty. That’s good news if you choose to sell or refinance later down the road. I’m not a lender, and I always advise my buyer clients to work with a lender directly to determine their best options. Depending on your circumstances, you may also want to consider a 7-year arm. A lot depends on your future plans. And, your budget.
Don’t give up on your property search just because the interest rates have climbed. You have options. Good options. It’s important for you to meet with a lender to get an understanding of what program fits you best. You can reach out to Debbie Goto at American Savings (808) 551-0163 for more information about the 10-year adjustable rate. I’m sure she’ll be happy to help you decide what options are best for you. Or, reach out to your favorite lender to see what they have to offer.
I’m extremely happy for my clients who were able to get into the home of their choice and I’m excited that my clients now have more options when it comes to financing the home of their dreams!
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