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“Fixing” Your Mortgage

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Mortgage rates don’t get much lower than this.

Megabank Wells Fargo is currently advertising a home loan rate of 2.375%. The only “catch” is that the loan is an adjustable-rate jumbo mortgage. Adjustable-rate mortgages, or ARMs, are famous for resetting to a higher rate after a specified amount of time. For Wells Fargo, the rate goes up after the first five years and then changes yearly after that.

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The best way to keep your mortgage under control is to get a fixed rate on a 15-year loan where the payments are no more than a fourth of your take-home pay. Have at least 10% down, but if you can wait to put down 20%, that’d be even better. When you put down 20%, you avoid private mortgage insurance (PMI). Do these things and you won’t keep the mortgage for too long or pay too much.

It’s no secret that mortgage rates have been low for the last few years. So when you have an adjustable rate, where do you think it will adjust? In a word, up.

In three words, up, up, up!

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