Some buyers look toward adjustable-rate mortgages
Posted on Monday, October 28, 2013 at 10:05:27 AM
A residential financing plan can be tailored to meet a specific person's preferences, and one deciding factor for many often comes down to mortgage rates. In fact, a number of buyers are looking at the adjustable-rate variety in order to save money in the short term.
At the moment, fixed-rates are still considered affordable. However, some buyers - especially affluent ones with jumbo loans - are choosing an adjustable rate in order to save money, according to The Wall Street Journal. Their initial rates could be around 2 percent, several points lower than a fixed-rate mortgage.
Therefore, more people are taking the chance on adjustable-rate residential financing, the news source reported. These plans only have a short amount of time before the rate changes. For most of 2013, 75 percent of private jumbo ARMs had a fixed-rate period of only one year, based on data from The Wall Street Journal.
Both options - fixed- and adjustable-rate - have benefits, according to Janice Revell, a contributor to Fortune. For instance, ARMs can help buyers who plan on moving again in a short period of time. They can pay during the low interest rate period, then sell before anything increases. Those who want to stay for a long period of time could still see savings by locking in a fixed-rate mortgage, as well.