Choosing the Right Mortgage Rate

Right At Home Daily: Ilyce's Corner
Ilyce Glink for Right At Home Daily

With interest rates bouncing up and down, you may want to consider getting a 3- or 5-year adjustable-rate mortgage instead of a 30-year fixed-rate loan. The interest rate will be much lower, and you could save thousands of dollars over the life of the mortgage.

Should you get an adjustable-rate mortgage? You're a good candidate for an ARM if you only plan to stay in your home or keep your loan for five years or less. The average homeowner refinances every five years or less, so the odds favor you here.

You're also a good candidate if you can stomach the idea that after three or five years, your fixed interest rate will adjust either up or down, depending on where interest rates are at the time.

Since you'll want the flexibility of being able to refinance whenever, make sure your new loan doesn't have a prepayment penalty.

Ilyce Glink is the bestselling author of 100 Questions Every First Time Home Buyer Should Ask, and is the Managing Editor of Right at Home Daily.

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