“Saving Thousands with an Adjustable Mortgage”

$380 a month in savings over a 30 year fixed rate loan is a lot of money. That wasn’t even the motivating factor, it was that they were planning on having their mortgage paid off in the next 8 to 10 years. These folks are on a mission.

They are both professionals and once a year get large bonuses and want to pay down their mortgage each time they got a large sum of money. So doing a fixed rate for 7 years, amortized over 30 years at and interest rate of 3.5% was nearly 1% lower than the 30 year fixed rate option.

I let them know, I didn’t agree with them, but they felt that over the next few years the interest write off would be taken away, so this benefit would go away. In spite of their feelings, I felt being high income earners, they would need the write off longer than 8 to 10 years.

There was no talking them out of their goal, as ultimately they made the final call, for them they felt the adjustable rate was the best option. The crazy part of all this, they aren’t alone, many are not opting away from a long term fixed rate loan and saving more money now.