Many homebuyers take it for granted that they should apply for a fixed rate mortgage. A fixed rate mortgage lets you lock in your interest rate for the lifetime of your home loan for predictability and stability. Nevertheless, there are some scenarios where an adjustable rate mortgage (ARM) may make financial sense. Let’s go over some examples.
Adjustable Rate Mortgage (ARM) in Florida
- Will your job will relocate you. Depending on your line of work, you might have an expectation of moving in the near future. Perhaps your employer operates in multiple cities and has a tendency to move employees between offices. Or maybe you work in an industry where you frequently need to change employers, necessitating regular relocations. Another possibility is that you could be in the military. In any of these cases, an adjustable rate mortgage could be a wise financial decision. You will be able to save money on interest over the several years you occupy your home. After that, you can sell and relocate, with the money you saved helping you along the way.
- Planning to upgrade to another home. Another situation where an adjustable rate mortgage might be in order is when you are purchasing a home where you do not visualize a long term future. You could be hoping to move into a larger or more luxurious home where you will stay for the long term, but simply not be able to afford it just yet. Taking out an adjustable rate mortgage for the short term would allow you to save extra money toward your purchase of a larger home when you are ready to move out of the smaller one you are buying now.
- Planning to move to a different neighborhood. Just as you might ultimately plan to live in a different home over the long term, you might also have your eye on a different neighborhood. Perhaps you plan to settle down in an affluent district, but right now, you simply could not afford any home in that neighborhood. Once again, an ARM can help you build up your savings if you plan to sell your current home in the next few years and relocate to that more prosperous district.
- When you have an investment opportunity in the short term. Finally, one more scenario where an adjustable rate mortgage could be the right fit is when you have an excellent investment opportunity available to you in the present. By taking out an adjustable rate mortgage, you will be able to put more money in the short term into that investment. The earlier you invest, the more money you can potentially make, since your investment will have more time to grow. In some cases, that might even mean that your investment earnings are more than enough to make up for higher rates later. But if not, you can refinance your ARM later to a fixed rate.
Our Team at Premier Lending Corp is Here For You
If you are trying to decide between a fixed and adjustable rate mortgage, Premier Lending Corp can help. Tell us about your financial scenario and goals during your consultation, and we will offer personalized recommendations. Please call 954-840-8811 to get started now!