An adjustable-rate mortgage (ARM) is generally attractive and usually hard to pass up. It includes a “honeymoon” period, allowing you to pay a lower-than-usual interest rate for up to seven years. Less interest translates to more savings within the initial period.
However, many Oregonians prefer the ARM’s antithesis — the fixed-rate mortgage. Here’s why it might benefit you:
You Like Simple Math
Primary Residential Mortgage, Inc. noted that any mortgage lender in Portland would say that a loan with fixed interest is straightforward. It makes shopping around a breeze because only need to compare rates and get a fairly accurate monthly repayment depending on your chosen term.
When it comes ARMs, the details of the loan can become complicated. In most cases, figuring out how much you would pay for the year after the initial period is over requires considerable work.
You Put a Premium on Stability and Security
If you take out a fixed-rate mortgage, you would know exactly how much you would pay every month until it matures. Your loan would be impervious to market forces, making it proof against interest rate hikes.
You Feel That Interest Rates Are Bound to Go Up
An ARM is most advantageous when the interest rates generally remain low after the initial period. If you think the current interest rates could no longer go down, a fixed-rate mortgage could be a safe bet.
You Plan to Keep Your Home for a Long Time
Many borrowers apply for ARMs because they only intend to resell and move within or after the “discounted interest” period of their loans. If you have no plans to change addresses in the future, then a fixed-rate mortgage might be more suitable for you. Besides, you can always refinance your mortgage later to snag a lower interest rate when the opportunity arrives.
Speak with an experienced lender to discuss your options. This way, you can learn about the newest financial products on the market and ultimately make an informed decision.