When my grandparents passed-away this past year, the house that they had raised my mom, aunts and uncles, was sold. For the first time in several decades, the house had a new owner.
Today, however, times have changed, and so have American living habits. New jobs – relocations – we’ve become a mobile society. Americans simply move around a lot and the majority of us will not live in the same house for more than 10 years; maybe not even 5 years.
As our habits change, so to should our thinking about our investments. As a house is one of the biggest investments most Americans can make, the 30 year fixed mortgage is not always the best option. For the last several years, as Americans have bought more house on less income, adjustable rates have been the savior of the mortgage industry. Unfortunately, as interest rates rise, these mortgages are going to become more expensive and harder to maintain for a society that pretty much lives paycheck-to-paycheck.
Fortunately, unlike standard ARMs, hybrid ARMs allow homebuyers and homeowners seeking to refinance their current mortgage, to lock in rates from 3 – 10 years. While the rate is higher than a standard ARM, it’s cheaper than a 30 year fixed. So, if you plan to only stay in your next home a few years – definitely less than 10 years – check a hybrid ARM with your mortgage broker.