Many people who buy houses get 30-year fixed mortgages to make the purchase, because they are considered to be the industry standard. If you’re not planning on being in your house for 30 years, why is your mortgage a 30-year loan? In reality, you may not need to get the traditional 30-year fixed mortgage to buy your house.

Using ARMS for Short Term Home Ownership

If you plan on selling your house at some point in their future, it may not make sense to get a traditional 30-year fixed mortgage. One alternative is an adjustable-rate mortgage or an ARM. Most adjustable-rate mortgages come with an initial fixed rate interest period that is lower than what you can get with a 30-year fixed rate loan. For example, you can get a 7-year ARM that has a fixed interest rate for the first 7 years of the loan. After that period is up, the loan interest rate will fluctuate based on changes in the market interest rate. However, if you plan on selling within the first 7 years, you really don’t need any loans with a longer fixed interest rate than that.

Saving Money

Using an adjustable-rate mortgage can be a good way to save quite a bit of money on interest and make your monthly payment lower. If you do not plan on being in your house for the long-term, it doesn’t make sense to lock in an interest rate for 30 years. You are essentially paying more in interest and higher monthly payments just so that you can get the security that comes with the extra years on the loan. The average homebuyer does not stay in a home for 30 years. Sometimes, getting a 30-year mortgage is overkill.

Considerations

If you are not sure how long you plan on staying in a house, sometimes getting a 30-year fixed rate mortgage might be the best approach to take. In some cases, you may not be able to sell your house in a timely manner, and your interest rate could change before you get the house sold. If it takes you multiple years to sell your house, this could result in a much higher mortgage payment than what you are used to. As long as you are willing to live with this risk, using an adjustable-rate mortgage can be a good way to save money on short-term home ownership arrangements.