What do buying a home in April and college basketball have in common? You’ll be following a bouncing ball on the courts and you’ll need to decide if you want a bouncing mortgage rate (an ARM), or a slam dunk (fixed rate).
Both offer advantages, and a number of choices. In general an Adjustable Rate Mortgage features an interest rate that can fluctuate over the life of the mortgage, while a fixed rate mortgage offers an interest rate that will remain the same. But, according to Jeff Guttentag (a.k.a. The Mortgage Professor), “The best mortgage type is the one that has the lowest total cost over the period that is the borrower’s best guess as to how long they will have the mortgage, provided that the borrower can afford the payment.” That means that if you know how long you’ll be in the home, and choose the mortgage rate that costs you the least during that period, you can save money.
For more details, read The Mortgage Professor’s full article, recently published in the Philadelphia Inquirer. Then, get ready to enjoy the madness and mayhem of college hoops.