*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for these loan products and/or discuss your options.
This may be a question that first time homebuyers ask because of their familiarity with landlords and fluctuating rent prices from year to year. This is one of my favorite questions to answer when I'm speaking with first time homebuyers because of the relief you see on their faces when they receive the answer. The short answer to this question...it depends on which loan product you get.
In many situations, borrower's will choose a fixed rate loan. Fixed rate loans are exactly how they sound! They're fixed for the entire life of the loan if you choose for them to be. Fixed rate loans are great in any situation, but especially when a borrower is looking to be in a home for a long period of time. Many of my friends purchased or refinanced their homes when rates were extremely low back in 2020 and 2021. Guess what? Just because rates are currently a lot higher than they once were, doesn't mean that their monthly payment changes at all. They're locked in at a low rate, and their payments will remain the same price each month no matter what.
Now, if a borrower locks in at a higher fixed rate mortgage, this doesn't mean that they're out of luck. Refinancing is always an option that can help their monthly payments plummet if they choose to lower their rate later on in their mortgage paying years.
Other people might choose to do an ARM loan. You can find out more about ARM loans here. In short, ARM loans are adjustable rate mortgages. This means that when a borrower first begins making their mortgage payments, they'll be lower, but as time goes on, their monthly payments will raise as their rate goes up. This might be a good option if a borrower is looking into refinancing in the near future, or if they're planning to sell their home before the rate adjustments happen. Although this might seem like a good short term decision, it might not be the best long term decision.
Just like I said earlier in the ARM paragraph, refinancing is always an option. Even if a borrower would like to refinance from an adjustable rate mortgage to a fixed rate mortgage, it's definitely possible and I'd love to help you with that!
Mortgages can adjust if you choose for them to, but if you choose a fixed rate mortgage, they'll stay fixed for the entire life of the loan if that's the decision you make.
For more information on the pros and cons of a fixed rate mortgage or an ARM loan, please contact me today! I'd love to help you get into the home you're searching for!
*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for these loan products and/or discuss your options.
Brayden Ramsay NMLS #1997195
Momentum Loans NMLS # 1606597
Comments