EchoBay Expert: My wife and I are planning on buying a house but we don't know whether a fixed or adjustable rate mortgage is the better choice. Her job may transfer her outside our state of Florida in the next few years but this is not definite. What is our best home mortgage financing option?
Loyal Reader: Since you don't know whether or not you'll be moving within the next few years, if your main concern is whether or not your payments will increase if rates go up, you may want to opt for a fixed-rate mortgage. This will help protect you from a substantial payment increase if rates rise in the future.
However, if you plan on moving to a new home within the next few years whether or not your wife's job in Florida comes through, an adjustable rate mortgage may be your best home mortgage financing option. Another factor to consider is your current cash flow.
An adjustable rate mortgage will give you a lower initial interest rate, providing you with a lower monthly payment at the beginning of your mortgage term.
It's important to remember that just because you opt for an adjustable rate mortgage now, doesn't mean that you won't be able to change that in the future. If you opt for an adjustable rate mortgage and you learn that your wife won't be transferred, you can always refinance into a fixed-rate mortgage at a later date.