Michelle will be selling her home in the next 5 years, as the oldest child will be out of high school in 4 years. Her plans are to move down south. We examined what the payment would be for the 30-year fixed and the adjustable, that would be fixed for 7 years. Her rate was 2.75%, not bad at all!
In 5 years she would save an additional $6,000 over 5 years. Her overall monthly savings was $366 per month. Even though her plan is to sell within 5 years, I convinced her to have the rate fixed for 7 years, just to play it safe.
I seldom ever recommend anyone get an adjustable rate mortgage, but in Michelle’s case, it was the right choice.
Report Examines Effect of Consumer Expectations on Price Recovery
By: Esther Cho