One of the first questions that comes up when making the decision to purchase or refinance a home is, “What type of loan program should I get?” Here’s a tip on choosing between an adjustable or fixed rate mortgage.
Adjustable vs. Fixed Rate Mortgages:
Which Loan Program is Right for You?
An Adjustable Rate Mortgage (ARM) is a loan that starts out with a low introductory rate, but the interest rate will change over time. To give a quick example, a 30-year 3/1 ARM has a set interest rate for the first three years. After that, the interest rate adjusts annually for the next 27 years.
Conversely, a 30-year Fixed Rate Mortgage has the same predictable interest rate throughout the entire life of the loan. This offers the security of knowing exactly what your monthly mortgage payment will be, from start to finish.
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