If you’re in the market to refinance, you may wonder if you choose a fixed or adjustable rate. Adjustable rates are often lower than fixed rates, but which of the Denver refinance rates makes more sense for your situation?

There isn’t a one-size-fits-all answer for this. It depends on your situation. Here’s what you should consider.

How Long Will you be in the Home?

An adjustable-rate loan works well for people who won’t be in the home for the long term. Let’s say for example you plan to move in 3 years. If you take a 5-year adjustable-rate loan, you will likely move before the rate is adjusted. In the meantime, you could take advantage of the lower introductory rate the ARM offers.

If you’ll stay in the home for the long-term, though, a fixed rate may be better. You’ll have a rate you know won’t change for the life of the loan. Your interest rate is guaranteed, and your payment won’t change unless your real estate taxes or homeowner’s insurance rates change.

Will your Income Increase?

If you’re in a job that will pay you much more in future years, you may consider an ARM just to get the lower payment now. Common examples are doctors and lawyers, but many careers have low starting points with a much higher potential of earning more money in the future.

If you need a lower payment for the time being but know you can afford a higher payment in years to come, an ARM may be preferred since you’ll get the lower interest rate.

Do you Prefer Stability?

An ARM loan is risky because it can change annually after you are out of the introductory period. If you prefer a more stable loan option, you may want a fixed-rate loan. With Denver refinance rates low right now, it’s a great time to lock in a low rate and keep it for the life of the loan.

Some people can’t handle an adjusting rate and do not know how much their mortgage payment will be each year. A fixed interest rate can help that.

Do you Qualify for a Fixed Rate?

If your DTI is close to the maximum and you have other ‘iffy’ qualifying factors, you may not qualify for a fixed rate. You may need the lower payment to get into the loan and then you can readjust as you move forward.

Some people take an ARM rate to take advantage of the lower rates and then refinance again before the rate adjusts if they stay in the home.

Final Thoughts

Denver refinances rates are great right now, so it’s a great time to explore your options. If you aren’t sure if a fixed-rate or adjustable rate is better for you, let’s chat. I’ll walk you through your different options and help you compare them side-by-side. Your mortgage is one of the most important personal finance decisions you can make, and I’ll be with you every step of the way as you decide.