ARM VS Fixed Mortgages - 2 Min. Tuesdays

ARM VS Fixed Mortgages - 2 Min. Tuesdays

Hello, everyone, I'm Lauren here, and this is Two Minute Tuesday, this is where we show people how to live better with their finances in about two minutes. Today, we're talking about the biggest financial decision there is… Your mortgage. The question is, do you want a 30 year fixed or a five one ARM? This is going to be a big one. So let's break it down in two minutes. So mortgages basically come in two types, fixed and adjustable, a fixed rate or traditional mortgage is where you're locked into the same rate for the life of the loan. In this case, 30 years. This is the no thrill's tried and true option that gives you peace of mind knowing you're not going anywhere. And neither is your mortgage rate. If you don't have the best credit score, fixed rate mortgages can sometimes be harder to get.

So you might have to settle for a smaller house. On the other hand, adjustable rate mortgages or ARMs. I meant adjustable rate mortgages… Not not these arms, but they're basically where you're rate adjusts after a set number of years. So a five one arm keeps the same rate for five years, then the rate starts going up or down each year afterwards based on the current interest rates. There's other arms as well, like seven one ARMs or even 10 one ARMs. They almost always have lower rates in those first years compared to a 30 year fixed rate mortgage. This lower rate gives you more money each month. And who doesn't like that? That extra money each month might also help you to buy into a bigger house. So how do you know which one is for you? It all boils down to time. How long do you plan to stay in your house. If you're looking to be in it for the long haul…

2 min tues

I want to grow old and retire here. Then a 30 year fixed is the way to go. But how often does that really happen? I mean, 30 years is a long time, like back to the future along. The average mortgage usually only lasts seven years and that number goes lower the younger you are. If you can see yourself moving in about five or seven years, an ARM might be a better way to go. You'll save more money with a lower rate for those first years. So the choice is yours. A 30 year traditional mortgage.. Peace of mind with a fixed rate for the life of a loan or a five one ARM, save money each month with a lower rate for the first five years. Then you can decide to stay or move on to greener pastures. There's really no right or wrong here. It's all about, well, time and how much time you see yourself in your new house.

So that's it for this week's Two Minute Tuesday. I'll put some links below to Coastal mortgage rates and calculators so you can play around with your own numbers. Be sure to subscribe to our channel and hit that notification bell to stay up to date on all the latest videos from Coastal. And remember, the best part of banking better is living better..

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