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When rates are this low, does an adjustable rate make sense? Are rates going to drop down even more? Please advise.

by franco546 from Northeast Harbor, Maine. Apr 1st 2016 Reply


Robert Oliveira (roberto)
#13 ranked lender in Massachusetts - 89 contributions

Rates vary based on market conditions so it depends on you the client on what you feel more comfortable with so fixed rates are good for stability so long term and adjustable is good for short term so if staying in home long term best for fix but if plan on moving in a few years then do adjustable. This is more on how you feel as to fix or adjustable best for your own unique situation..

Apr 1st 2016
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Richard Airey (richardairey)
#5 ranked lender in Maine - 662 contributions

Generally speaking, with rates this low, there is not a huge advantage to go with an adjustable rate mortgage in my opinion. As Robert stated, if you are positive you will not be in the property in a few years, it may make sense. A good Loan Officer will be happy to provide you detailed estimates for whatever fixed and adjustable options you'd like to see so that you can make an informed decision based on your goals. I am a lender here in Maine and would be happy to provide you with a quote! I'm located in Portland. Feel free to call or email. My direct line is 207-321-5307.Best,Rick Airey

Apr 1st 2016
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,925 contributions

Typically, we can predict with fairly certainty what rates will do in the near future, but the further out you go, the less certainty there will be.. That being said, If rates do improve, it usually happens slowly over a long period of time.. but when rates decline, it's fast and over a short period of time.. knowing this, there is a greater likelihood of rates going up then down.. As far as ARM's... I advise clients all the time that if you know you will be in your home for 5 years.. then do a 5/21 ARM.. if you know it will be 7 years, do a 7/1 ARM.. but I would never advise someone who plans on being in their home for 10 years to do a ARM rate.. Any savings they get in the beginning of their ARM rate could be eaten up once the rate starts to adjust if rates are higher.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Apr 1st 2016
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Will Zinn (mainewill)
#2 ranked lender in Maine - 17 contributions

Adjustable rates can be tempting but the downside is that annoying sound you get when rates start to increase (which they will). The sound is kind of a high pitched buzz. It will come and go. The actual sound will be from grey hairs growing out of your ears caused by stress.

Apr 1st 2016
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Lorne Harvey (lorneharvey)
#81 ranked lender in Washington - 418 contributions

You could consider a 7/1 ARM and see if it makes sense. Compare that rate to a 30 year fixed and do a break even analysis.

Apr 1st 2016
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Drew Hernandez (DrewHernandez)
#976 ranked lender in California - 24 contributions

That's a great question with several different correct reasons to still get an adjustable mortgage. Generally you are paying a premium to your lender for them to eliminate the variability and fix your interest rate for the term of the loan. However certain investors and/or borrowers know that they plan on selling their home in 5 years or less. In this case where the mortgage will not be kept past 5 years, it would not be necessary to pay this premium and secure a 30 year fixed. Other cases where adjustables would work is in a situation where you knew you wanted to refinance the home in the future. If you plan on changing your mortgage and eliminate PMI, you would also be served with a loan that has a shorter than a 30 year fixed term.

Apr 4th 2016
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