Refinancing to a Fixed Rate Loan or an ARM

If you have an adjustable rate mortgage, you probably got a low initial interest rate. However, periodic rate changes and the possibility of future rate hikes might make you a little uneasy when the loan begins to adjust. Switching to a fixed rate loan might be the answer. But there are a host of things to consider like how long you plan to stay in your home. If you plan to be in the house for a short period, then an ARM might be appropriate. There are adjustable rate mortgages on the market that provide a fixed rate for a set period, say 5 years, and then change to an adjustable rate thereafter. The first five years of an ARM usually have a significantly lower interest rate than a fixed rate loan, but will increase over the remainder of the loan life. This is also an important factor when deciding to refinance to a fixed rate mortgage. If you plan to stay long term or retire in the house, then perhaps a fixed rate with a 15, 20 or 30 year term might be best. Again, a McCue Mortgage loan originator can help you determine the best course to take.