September 30, 2023
By Swapna Venugopal Ramaswamy
Jessica Geren and her husband, Matt, traded in a 2.75% mortgage rate for a 5.5% adjustable-rate mortgage in July when they sold their home in Ledyard, Connecticut, to buy a new home in Croton, New York.
The 5/1 arm adjustable-rate mortgage loan the Gerens took provides a fixed interest rate for the first five years, after which it switches to an adjustable interest rate for the remainder of its term. Depending on the interest-rate climate in the future, it could get more expensive.
That was the only way the couple said they could make the math work.
As most homebuyers and sellers are sitting on the sidelines (home sales dropped 15% in August from one year according to the National Association of Realtors), the couple is wading in, despite the painful combination of high prices and rising interest rates.
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