When applying for a mortgage, be sure to look at all the available loan programs and their corresponding mortgage rates. Typically fixed-rate mortgages come at a premium to adjustable-rate mortgages because of their perceived stability, but nowadays many investors are offering 30 year fixed mortgages below adjustable rate mortgage prices.
It does depend upon the investor, and interest rates may vary widely from bank to mortgage lender, but you should check out all the programs offered by the bank you ultimately submit your loan to. There’s a good chance the 5 year ARM is pricing lower than the 3 year ARM, and that the 30 year fixed is pricing the same, if not better than both.
The 30 year fixed product usually comes with an interest-only option as well, so you can take advantage of flexible mortgage payment options along with the stability of a fixed program for the price of an ARM. Along with the lower rate, you’ll have peace of mind in knowing that your interest rate won’t change for the life of the loan, even if rates continue to rise.
Even those who aren’t interested in holding a property long term should consider a fixed program as it may price lower than an ARM, and could prove to be a lifesaver if you have trouble selling a property as your mortgage becomes adjustable.