I get people in my office or on the phone, telling me they want NOTHING but a 30 Year fixed loan!

When I ask WHY?, they reply because its safe, I don't want an adjustable,  I want to lock in and not have to worry about my payments going up etc.

Of course my next question is HOW LONG DO YOU PLAN TO STAY IN YOUR HOME? 5 times out of 10 its less then 10 years.

The mainstream media has put such a bad light on "Adjustable" Mortgages however they are a great and effective tool if used correctly.

The ONLY time a 30 Year Fixed mortgage is a great option is if you live in your dream home and don't ever plan on moving OR REFINANCING AGAIN!

For example if you plan or, there is a very good chance you will be moving in the next 3 years why not get a 5 or 7 year ARM? Usually the rate difference can be as much as a full 1%!

So instead of a 5.75% 30 Year fixed you could get a 4.875% 5 Year Arm. The payment difference on a $200,000 loan would be $108.73 or $1,304.76 a year over the three years you stay in the home you end up saving $3,914.28!

There are no such things as a "BAD" loan! Its imperative that you are fully educated on  how a loan program works to see if it will fit with your financial and life goals. If you have a good loan officer he/she should explain the loan to you.

I am a  HUGE fan of the pick a payment loan (option arm) especially for self employed individuals. These loans give you flexibility of cash-flow each month and if one has financial discipline can be used as a way to create incredible retirement income. (More on that in another post) With that being said, those who do not understand the loan, or how it works can be hurt by it, yet it is a powerful loan option.

When you are looking to purchase or refinance, try to think about what your financial goals are. Don't get caught up in the media hype of 30 year fixed only. Understand your time-lines and be ready to make adjustments if your life should  change from the plan your originally come up with.