A mortgage is a thing which will cost you a lot of money for many decades.
A mortgage squeezing your budget is something that many people experience at least once in their lifetime. This is part of the reason as to why most lenders will scrutinize over your financial situation and only loan you as much as you can viably afford. But life is unpredictable: layoffs happen, home repairs may be frequent, vehicle damage, illness or injury to you or your family, and any other unforeseen circumstances can take a huge chunk out of your already limited budget. Here are a few ways you can get a lower mortgage payment.
Interest rates are near historic lows and what a low interest means for you is a lower monthly mortgage payment. Even a refinance at 3.5 percent on a 30-year fixed-rate mortgage for $250,000 can save you an extra $125 every month! It’s like getting a raise without having to do all the work. (Note: The refinance does take some work.)
- ARM v. Fixed-Rate Mortgage
While most people settle on a 30-year fixed rate loan, few people ever see it all the way through due to a higher salary, moving, kids, etc. A short-term adjustable rate mortgage (ARM) will have a lower starting rate, so you will save money in those early years. An ARM is usually fixed for about three, five, seven, or ten years. If you are planning to stay less than ten years in your new home there is no reason as to why you would pay extra, so go with the ARM.
Mortgages may seem like stressful contracts to obtain, but with the right preparation, they don’t have to be! Contact Dean Rathbun when it comes time to finding the perfect plan of action to buy your home. We are happy to help you.