For people who are planning to live in their home for 5 years or less, an Adjustabl Rate Mortgage may an option that allows you to receive a lower interest rate than a traditional thirty year fixed mortgage.

For an intitial period of time, usually ranging from 2 to 5 years the interest rate and monthly payments are fixed. The remaining years on the life of the mortgage the interest rate may adjust to market rates or even higher.

This loan is the perfect solution for the individual who will only be living in their home for several more years because they can reap greater monthly payment savings utilizing the lower rate of the adjustable mortgage and they will have sold their home before the adjustment period begins.

Considering an interest only option is recommended as well. There are ARMs available with interest only periods, and this combination will often get you a great rate as well.

When applying for an Interest Only or ARM mortgage find out whether there is a prepayment penalty with the particular program. Prepayment pentalties are not necessarly a bad thing, you may sometimes be able to get a lower rate by accpeting a prepayment pentalty, but you want to make sure you are not going to be getting out of that particular mortgage before the pentatly expires and causing an unwanted expense in your mortgage payoff.

The other important aspect to consider in a short term mortgage situation are the loan origination fees. In this case, it will usually make sense to pay the lowest fees possible, even if it means paying a higher rate of interest. The reason for this is that the higher rate will still not cost as much as the fees in the short term. A qualified mortgage professional such as myself can do the calculations to make sure that your mortgage costs are the most sensible for your situation.

Many people focus on the 30-year fixed rate mortgage. Often, this is not the best option. The interest rate is usually higher than you could get on an adjustable-rate mortgage (ARM). Look at both options when considering your new mortgage to see which one is the best fit for your situation.

For short term, paying the least amount monthly seems to be the best option...In a short period, 2-3rs, how much principle would you really have paid and why pay more interest than necessary?...Maybe you have a better more immediate need for that money, like getting ready for the move you know is coming in a couple of years and creating a better position for the next loan...