What kind of buyer is best suited for fixed-rate mortgage vs. an ARM?
Buyers who plan to stay in a home for the long term or who can’t stomach the risk of a variable mortgage rate are better off with fixed-rate mortgages, Livingston says. Long-term homeowners often include families with young children that move into a neighborhood for the schools. ARMs make sense for borrowers who plan to stay in a home for the number of years that the mortgage’s rate is fixed, especially if that temporarily fixed rate is significantly lower than what’s offered in a fixed-rate mortgage, Cummings says. Newlyweds who plan to upgrade or individuals who are transferred to new locations for work every few years often benefit from an ARM. What about locking in when refinancing? The benefits of locking in a rate when you’re refinancing become apparent more quickly than when you’re buying a home. That’s because once you’re quoted a new mortgage rate, you can compare it to the rate you’ve been paying so far. Assuming the new rate is lower, you should consider locking it in, Nicho
