Checking Out Your Mortgage Options

There are some of obscenely low mortgage rates available right now. While a conventional 30 year fixed-rate is definitely the safest mortgage and the one least likely to give you a financial headache in the future, it is not always the best option. In a low interest rate climate like that of today, an adjustable rate mortgage can save you a pretty significant amount of money. The real value of an adjustable rate mortgage lies in how long you plan on owning the property.

If you are a first-time buyer, you should know that most first-time homeowners stay in their home for a period of 5-6 years. Adjustable rate mortgages are far more valuable in the short term than the long run if the interest rate climate is low. Alan Greenspan was right when he said that people who went for adjustable-rate mortgages have been the winners in the recent low-rate environment. Recent research has indicated that many homeowners have saved tens of thousands of dollars in adjustable-rate mortgages in the past decade. Last week Freddie Mac reported that the average five-year, adjustable-rate mortgage averaged 4.38%, up from the previous week's rate of 4.35%. Meanwhile, the 30 year fixed rate rose to 4.92 percent for the week ending October 15, up from the previous week's 4.87 percent.
Both of these rates are hovering just above lows. We are also seeing VA, FHA, and reverse mortgage, rates starting to follow suit as homeowners are taking advantage of low rates through refinancing their current balances. It will be interesting to see what the future holds for mortgage rates as the Federal Reserve starts to decrease their purchasing mortgage backed securities and the American housing market continues to pull itself out of recession.