Fixed-rate mortgages and adjustable-rate mortgages are the two categories of primary mortgages. Though the marketplace provides a diverse variety of both types, the first step to acquiring a mortgage is determining which one will best suit your needs.Verify my mortgage eligibility (Jan 28th, 2022)
If you plan to purchase a home, you’ll likely utilize a mortgage for financial assistance. When deciding how much interest you’ll pay and whether your rate may change in the future, you’ll either choose a fixed-rate mortgage or an adjustable-rate mortgage.
This blog post will discuss the difference between both.
Verify my mortgage eligibility (Jan 28th, 2022)
The Basic Difference
Your interest rate in a fixed-rate mortgage remains unchanged for the rest of the life of the loan. For instance, if you opt for a 30-year mortgage, you’ll pay the same rate for the next 30 years.
On the other hand, rates and monthly payments in adjustable-rate mortgages (ARM) are likely to change periodically. For instance, a 5/1 ARM will initially lock in your rate for five years but fluctuate once every year. The rate either escalates or falls based on the rate trends in the United States.
Which Loan is Best Suitable?
When choosing a mortgage, there’s a wide range of personal factors to consider according to the economic realities of an evolving marketplace.Verify my mortgage eligibility (Jan 28th, 2022)
To decide between the fixed-rate mortgage and adjustable-rate mortgage, ask yourself the following questions:
- How much mortgage payment can you afford?
- Will you be able to afford an ARM if the interest rates increase?
- How long do you plan to live on the property?
Advantages of Fixed Rate Mortgage and Adjustable-Rate Mortgage
A fixed-rate loan protects the borrower from unexpected increases in monthly mortgage payments given that interest rates rise. They are also easy to comprehend and may vary based on the lender.
On the other hand, ARMs often leverage lower interest rates which means you might be eligible to pay more principal per month.Verify my mortgage eligibility (Jan 28th, 2022)
We recommend you hire reliable mortgage brokers to help you decide between fixed-rate mortgages and adjustable-rate mortgages. At CMS Mortgage Solutions, we also deal in refinancing solutions, home loans for first-time homebuyers, current mortgage rates, and more.
To ensure 100% customer satisfaction, we make every process as seamless as possible. With years of experience in the field, our mortgage brokers have helped thousands of homebuyers make an informed decision when making the big purchase. For more information, get in touch with our representatives via our website.Show me today's rates (Jan 28th, 2022)