Arizona home buyers considering different financing options because of mortgage rates
PHOENIX (3TV/CBS 5) - High-interest rates are making Arizona home buyers look at different financing options to buy a house.
Adjustable-rate mortgages may be making a comeback, but is that the best option for you? Consider seeing how much money you can save by a temporary buydown or an adjustable-rate mortgage. Starting with the ARM, your mortgage payment will be lower at first with lower rates. The fixed period lasts three, five, seven, or ten years with the rate adjusting every six months afterward, market depending.
According to the Mortgage Bankers Association, demand for the adjustable-rate mortgage has nearly tripled since December. One downside of this is that your payment could increase significantly over the life of the loan. Some experts believe that ARM loans are riskier. Mortgage banker Matt Baker says he believes there’s a better option.
“Really the sweet spot right now is that temporary interest rate buydown now in the industry. We call that a two-one buydown--depending on what you’re looking to do,” Baker said. “Essentially, all you do there is you take the current rate, and you take, let’s say 2% to one buy down, so 2% the first year and 1% the second year and you prepay that upfront.”
Because of lending rules, seller participation has to be involved. So how high exactly are mortgage rates going this year? Baker believes we could see anywhere between high sixes and low sevens. So if you’re looking to buy a home this year, meet up with a loan officer that you trust and have them analyze the best option for your needs by factoring in all your goals and future plans.
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