If you are trying to decide whether to choose a fixed or adjustable mortgage rate, you will need to consider the advantages and disadvantages of each option as well as the specifics of your situation and goals.
If you haven’t already, start by reading ” Fixed vs. Adjustable Rate Mortgages: Pros and Cons.” Then, read below to find out which situations call for fixed versus adjustable rates.
When to Consider a Fixed Rate Mortgage in the Shoals
In most cases, the easiest way to figure out whether to choose a fixed or adjustable mortgage rate is simply to think about what your plans are for the future.
How long do you plan on making the Tri-Cities area your home? Do you plan to stay in the same house the entire time, or are you hoping to upgrade in a few years?
If you do believe that you will be staying in the same house over a long period of time, especially 15 to 30 years, a fixed rate mortgage probably makes the most sense.
When you go with this type of home loan, no matter what happens with mortgage rates in the area over the decades ahead, you will still be paying the same low fixed rate that you have access to today.
That means that you can rest assured that your home will remain affordable to you in the future.
A fixed mortgage rate is also a good option if you have a risk-averse disposition and are simply looking for greater stability and peace of mind when it comes to financial matters.
When to Consider an Adjustable Rate Mortgage in the Shoals
So, if a mortgage with a fixed interest rate is the most stable option, when would you want to pick an adjustable rate mortgage instead?
Let’s say that you do plan to stay in the Shoals, but you are hoping that in a few years after a promotion or two, you might be able to move into a larger home.
If you took out an adjustable rate mortgage, the low introductory rate could help you save money toward that bigger home. And since you do not plan to keep that mortgage or that house, you do not need the long-term security and stability which goes with a fixed rate mortgage.
Another situation where an adjustable rate mortgage would make sense is if you will be only staying in the area for several years.
Once again, the low introductory rate on the ARM could help you save money now over the higher rate you would be paying with a fixed rate mortgage.
You would then be moving out of the house hopefully around the time that the introductory rate would expire.
We Can Help You Choose the Most Suitable Type of Mortgage Rate
Still not sure which type of mortgage rate would be most ideal for your needs? We can help you figure that out during your mortgage consultation in the Tri-Cities. Please give us a call at (205) 495-0313 to get started.