When you seek refinancing, you have two options. Either, refinance to a fixed rate mortgage or refinance to an adjustable rate mortgage (ARM). Both types of mortgages can help you lower your monthly rates, but you have to know the difference first.
Refinancing to an adjustable rate mortgage (ARM) may be the best option if you want to keep interest costs low. ARM literally allows you to adjust your mortgage rate so it can be affordable to you, hence the name.
Also, if you have plans to sell your property within a few years, then an adjustable rate mortgage may be the best way to refinance. The initial rate that you will be offered for an ARM is usually lower than the rate on a traditional 15 or 30-year mortgage.
Therefore, you would be able to lock in the lower rate and sell before rates start to rise again. Generally speaking, people tend to prefer refinancing to a fixed rate mortgage whenever rates are at a relative low.
Fixed Mortgage Rate
However, if rates fall even lower, a fixed rate mortgage would lock the borrower in at a higher rate. In these cases, it is best to go with an adjustable rate refinance mortgage option.
In any case, you have more than these 2 options to achieve lower monthly payments. Get started today to help get lower rates ASAP.