If the cheapest fixed rate mortgages will save you money, why pay for more?
Take this challenge...count on one hand the homeowners you've known to pay off a mortgage.
Choose A Lower Mortgage Payment Instead
For over 20 years, my mortgage clients returned to me for their refinances or because they bought new homes. The 2nd or 3rd time, I usually inquired whether they wanted to continue on the route of a 30 year fixed rate.
"Do you realize the average homeowner gets a new mortgage every 5 to 7 years? You also seem to support those statistics. Why are you choosing to pay for a long-term mortgage if you're only keeping it a few years?" I'd ask.
Adjustable Fixed Rate Mortgage - The True Hybrid
During my mortgage career, I observed fear of unstable adjustable rates cause many homeowners to take refuge in the safety of a 30 year fixed rate mortgage, even when long term interest rates made a monthly payment too high to afford. Seldom was their mortgage kept long enough to benefit from the expense of long term security.
If this sounds like you today, listen closely because I have a solution. I am going to give you the money saving secret I shared with my clients before retiring from 20 years of mortgage lending. Here is how to get a lower mortgage payment.
Consider one of the cheapest fixed rate mortgages, a hybrid. You may have heard of them, a 3/1, 5/1 or 7/1 mortgage. Hybrids combine the best features of both an adjustable and fixed rate mortgage. Some lenders call them fixed rates. Others refer to them as adjustable rates.
What's more important is for you to understand what to expect from them. Then you can decide if a hybrid mortgage will save you money.
Hybrid Examples
30 year fixed rate mortgages potentially tie up a lender's pocketbook for many years. That's why mortgage companies generally charge more for long term fixed rates. Since most homeowners keep a mortgage 5 to 7 years, why should they overpay for a long term mortgage? has many options.
Why not opt for one of the cheapest fixed rate mortgages like a 5/1? The "5" means the interest rate and the payment are fixed for 5 years. The "1" means after 5 years, the interest rate and the payment will both be set for a year at a time. For a little more security, consider a 7/1 which extends the fixed period an additional 2 years. For those who anticipate selling their home or refinancing after 3 years, there is even a 3/1. Generally the shorter the fixed period, the lower the interest rate.
By exchanging an extended fixed rate term for a hybrid mortgage, lenders pass on a lower interest rate to borrowers. Homeowners benefit from a lower mortgage payment.
What a deal!
Cheapest Fixed Rate Mortgages
So if you are refinancing or buying your next home, consider one of the cheapest fixed rate mortgages. Don't pay for more than you need. Secure your best mortgage rate and enjoy a lower mortgage payment.
After all, it's your mortgage and your home. You deserve the best!
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