In my 17+ years helping individuals secure home financing in the tri-state area, one question that always comes up is what type of mortgage to get.
Most of my clients initially think that the traditional, more expensive, 30 year fixed option is always the way to go. After we review their loan profiles together, many begin to reconsider this when they look at two things; time horizon and monthly savings.
1. Time Horizon
Studies show that most residential mortgages are held for only five to seven years, with the individual either selling or refinancing within that amount of time. This is particularly true in the case of cooperative apartments with their strict rules limiting the usage of apartments as investment properties. In many cases of people getting the 30 year fixed loan type, the additional years of having a fixed rate (which they paid more for) are unneeded and go unused.
2. Monthly Savings
Borrowers typically save more on monthly payments with an adjustable-rate mortgage. Depending upon loan specifics, the total savings in payments can reach tens of thousands of dollars a year. Depending on a borrower’s profile, an adjustable-rate mortgage can be a great fit. It never matters to me which type of loan my clients choose, as long as they are well informed so that they understand the options and make an educated decision for themselves.
Have questions about your situation?
Email me to set up a time to touch base, so we can discuss your questions and scenario in detail.