I expect to be transferred in five years. What kind of mortgage is right for me?
You could try an Adjustable Rate Mortgage and, in fact, they can be very helpful if you don't plan to stay in your home.
With an ARM you'll get a very competitive fixed rate for the first few years of your mortgage. Typically, ARM terms run from three to seven years, but you can also get a 10-year ARM. These introductory rates are locked in for the period, so you get low payments.
After the rate period, your interest rate will change, probably going higher. So if you plan to be in an area for just a few years, you can enjoy low payments at the beginning and sell before the adjustable rate phase starts.
A fixed rate loan payment will never change, but, in your case, you will pay less with an ARM for the first five years.
Lenders specify caps that limit the amount of the rate increase and payment in the adjustable phase. You'll want to look closely at this because, if your plans change and you stay in the home, you want to be able to afford the payments.
Although in this era, mortgage rates have been fairly stable, with some increases, it is actually possible that if interest rates fall the adjustable payment could drop.
You'll also want to check on a prepayment penalty fee. Some ARMs have them.
But ARMS might also be good for homeowners who can and will pay off their home before the adjustable period begins. This could be because their income is uneven, maybe they get large bonus or commission payments at the end of the year, but they want to pay a lower monthly payments. In that case, they might make lump sum payments to the principal at the end of the year and then refinance.
Be completely sure you understand all rules, fees and structures of the ARM. It can be complicated, but it might also be right for your situation