Don’t be afarid of the adjustable mortgage rate ride!

Buying a home with an adjustable mortgage rate is like riding a roller coaster. There are ups and downs as the interest rates move up and down with the market. Five years ago, that roller coaster was more of a toddler-friendly ride. There were peaks and valleys, but it was all very slow and manageable. But now, the ride is much more like the kind your friends dared you to ride in high school, even though you were terrified. The highs and lows are a lot more extreme.

Unfortunately, changing your adjustable mortgage isn’t so easy, just like it isn’t so easy to get out of the roller coaster car once you’re strapped in. So, what can you do to make the ride more bearable when interest rides are on such an intense trajectory these days? Here’s some tips we’d like to share.

• Learn the terms of your mortgage agreement. Reading the fine print to see exactly what you have signed up for with your adjustable mortgage rate is crucial. You need to know when to expect your rate to change, the penalties for refinancing early, and the terms of making lump sum payments. To be prepared, you need to know every possible twist and turn your mortgage ride may take.
• Plan for the worst. They say the drop on a roller coaster is the worst part, but most of us know it’s the bit at the beginning when you’re slowly climbing to the top before the drop. With interest rates continually rising, you may be slowly inching towards that inevitable crash. So what can you do? Starting preparing. Research better financing options, update your budget, reduce expenses, and do everything you can so that you’re ready to hold on when that interest-rate ride takes off.
• Pay off your mortgage faster. If all you can think about is getting off the mortgage rate rollercoaster ride, then it’s time to make up a plan to pay it off as quickly as possible. Whether that means making lump sum payments each year or starting a high-yield savings or investment fund to save up for a large payment, take steps now to get off the mortgage rate ride.

We know that having an adjustable-rate mortgage feels scary right now. But we’re right there with you, figuratively sitting beside you in the cart, waiting for the ride to start. With the help of your PRMI loan advisor, we can help you weather the rollercoaster ride of an adjustable-rate mortgage with ease!