Should You Refinance Fixed or ARM?
When it comes to refinancing your mortgage, there are a variety of options for you to choose from. A majority of refinancers are choosing fixed-rates; however, is an adjustable-rate mortgage a better option for you?
The answer: it depends on your goals.
Take a minute to establish your refinance goals. Do you fall into the two below categories?
1. You’re a homeowner who needs a jumbo loan and you want to keep your payments as low as possible.
2. You’re a homeowner with firm plans to sell your home in a few years due to either job transfers or retirement.
If you find yourself in either of those two situations, then you may want to consider refinancing to an ARM. Why? Because the initial rate on an adjustable rate mortgage tends to be lower than a fixed-rate. This will keep your monthly payments low – for a while. Keep in mind that the initial rate is only set for a certain amount of years with an adjustable rate mortgage and you could see the rate rise once the designated amount of time is over.
So when you consider your refinancing options, consider your ultimate goal for refinancing. Are you looking to pay your loan quickly and avoid the risk of a rising monthly payment? Then stick with a fixed-rate mortgage. But if you’re looking to keep low payments and are planning to sell in a few years, then you should consider an ARM.
Still unsure what’s your best option? Talk to one of our loan officers to help you out.