Ask Terry Questions Mortgage — adjustable rate

Mortgage — adjustable rate

By Terry Savage on September 26, 2015 | Housing / Real Estate

My ARM is at 3.50% and is due May 2020. I plan on selling my house by then . Should I save as much as I can for a down payment on my next house or put xtra towards the principal?

Terry Says: Well your ARM might not be DUE until 2020, but I’m betting there is a provision for a rate increase before then — if the general level of interest rates rises, which is likely.   Check the wording on your document.  Beyond that, a lot depends on your plans.  If you were planning to stay n the home, I’d suggest you refinance now to a 15 year fixed rate mortgage, at current low rates which are slightly below 4%.   That might be a good idea if you’re planning to stay in the home even for just five years, as you will pay less interest and build equity faster.

And the question of saving for the “next down payment” requires more knowledge than I have about your entire financial situation.  I assume you will have some equity in your current home, just via your initial down payment. And the market value may move higher in the next 5 years.  So a lot depends on whether you have debt, other savings, a retirement plan, etc.  This is the kind of total picture you might want to discuss with a Certified Financial Planner.  (Go to



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