While it may seem impossible, know that thereisa perfect mortgage for every mortgage borrower. For some, that may be an adjustable-rate mortgage! This mortgage is one that offers introductory mortgage rates for up to the first ten years of a loan. After this time, the loan’s mortgage rate adjusts annually to the current market conditions. By selecting this mortgage, banks offer low mortgage rates in return during the initial period.
Before you go ahead and secure an adjustable-rate mortgage or fixed mortgage, always ask yourself these three questions to help you decide.
What is the current adjustable-rate mortgage spread?
The ‘spread’ is known as the difference between mortgage rates between an adjustable-rate mortgage and a fixed-rate mortgage. In short, the bigger the spread, the more attractive the adjustable-rate mortgage will look. The lower the starting mortgage rate, the more substantial the savings. However, savings can reduce or evaporate after the initial period.
What’s the time frame in the house?
If you don’t see your next home as your ‘forever home’, you may be able to save money with an adjustable-rate mortgage! Many U.S. home buyers could be better suited to an adjustable-rate mortgage rather than a fixed one. This is because a vast majority of homeowners sell their home before their adjustable-rate mortgage would begin to adjust, whether increasing or decreasing.
Is your mortgage a jumbo loan?
A jumbo loan is a mortgage loan which exceeds the loan size limits for an area. Loan limits do vary by region, but you’re still able to borrow more than your area’s loan limit. However, the fixed-rate pricing tends to deteriorate. The difference in mortgage rate between a fixed rate loan within limits and the one that’s outside of loan limits can be as high as 1.5 percent! However, for an adjustable-rate mortgage, jumbo loans can be cheap.
Skip the lengthy search of finding the right mortgage provider –Contact Gaylord-Hansen Mortgage Team at Caliber Home Loans in San Diego, California to get access to the best home loans in Southern California.
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