When buying a house most people assume the 30 year fixed mortgage rate is the correct financing decision. In fact, when you hear others talking about mortgage rates most of the time they are referring to the current interest rate of a 30 year fixed mortgage. On TV, when you hear mortgage rates are at 4% they are likely discussing 30 year fixed mortgage rates. Please understand that you do not have to lock in to a 30 year fixed home loan. In fact, it you want the lowest possible mortgage interest rates you will want to look at adjustable rate mortgages. Generally speaking, the 5/1 ARM is three quarters of a percent (.75%) lower than the 30 year fixed mortgage. You can find current mortgage rates here.
If you are willing to accept the fact that your mortgage rate can adjust after the initial five year rate period you can get lower interest rates. In May 2015 the 5/1 ARM is at 3% with 30 year fixed mortgage rates are at 3.75%. When crunching the numbers and looking at the monthly payments as well as the unpaid balance left you will find that you can save a significant amount of money. Below is a graphic that shows how much you can save by taking out a 5/1 ARM loan compared to a 30 year fixed mortgage.
If you want to know more about refinancing your current home or purchasing a new home at low interest rates please feel free to give Real Estate Experts a call. We have real estate agents and professionals that can help you better understand what decision is correct for you. Do not feel as if you have to do what everyone else is doing in terms of financing a home loan in 2015.