Two Home Loans You Must Consider
Did you know only 9% of home owners stay in their home or keep their loan for ten or more years? Did you also know 94% of home-loan applications are for 30-year fixed mortgages? With 30-year fixed mortgage rates are in the mid-to-high 3% range it’s hard to argue with anyone wanting to lock up a 3.5% mortgage for as long as possible but that also means the overwhelming majority of people are applying for 30-year fixed mortgages and won’t ever come close to keeping that loan for even the first 10 years.
Now that we are seeing 30-year rates creep up above 4% there are two home loans you must consider that will keep your interest rate as low as possible. These two loans are the 7 & 10 year Adjustable Rate Mortgages, also known as ARMs. These loans are still 30 year terms and the rate is either fixed for the first 7 or 10 years. Many people think Adjustable Rate Mortgages are the reason for the banking crisis and subsequent mortgage meltdown that happened from 2007-2010. While there were truly some victims of bad loans what most people don’t realize is that most of those ARM loans adjusted down. I know people who are still in their ARM loans from 2006 who now have interest rates in the 2% range.
Here is a current comparison of a 30 year fixed, 10-year ARM, and 7-year ARM:
| 30-year fixed | 10-year ARM | 7-year ARM | |
| Loan Amount | $300,000.00 | $300,000.00 | $300,000.00 |
| Interest rate | 3.88% | 3.50% | 3.13% |
| APR | 3.96% | 3.69% | 3.27% |
| Pay/mo | $1,410.00 | $1,347.00 | $1,285.00 |
With only 6% of home-loan applications for ARMs most people are paying more for their loan than they need to. Every scenario is different and with the right mortgage plan in place you can use your home loan to find the right balance between security and savings. To get your mortgage plan going click here to contact me by email.
By David Hughson
Mortgage Planner With A Plan
858-863-0264