When deciding between loan options, one of the first things to consider is whether you want a fixed or adjusted mortgage. An adjusted or adjustable rate mortgage can be an excellent choice for certain financial situations, while fixed rate mortgages might provide more advantages.
To help you decide which option works best for you, here are some more facts about these two mortgage types:
With adjustable rate mortgages, the interest rate varies over the life of the loan. Interest rates for ARMs typically start off lower than those in a comparable fixed-rate loan and rise as they accumulate over time.
Adjustable rate mortgages typically have a period for which interest rates remain constant, after which interest rates adjust on a prearranged periodic basis. Fixed rate periods can be anywhere from 1 to 10 years long.
The interest rate for a fixed-rate mortgage will remain unchanged over its entire lifetime. This means your total monthly payments are the same every time, which can make budgeting simpler for homeowners.
In addition to easier budgeting, they offer protection from outside economic factors like dramatic changes in mortgage interest rates.
When it comes to choosing a mortgage, there are multiple personal and financial realities to weigh. While your individual financial situation might fluctuate over time, interest rates can also rise or fall based on broader economic factors.
A fixed rate mortgage will help you create a rock solid budget, no matter how interest rates might change over time. However, an adjustable rate mortgage might be easier to qualify for because of their requirements, since the interest rates are not fixed and the lender may increase them as the market changes.
Keep these factors in mind and discuss your options with a financial advisor to determine the best possible choice for your financial needs.
Eileen is a Licensed Real Estate Salesperson and has been in the industry since 2004. Her experience in home sales range from a $4,000,000 single family home to a $100,000 Co-op. She covers both Westchester and Putnam County and works with both buyers and sellers. "My love for Westchester and particularly the Hudson River Valley is one of the many reasons why I enjoy working in real estate". She is a lifelong resident of Westchester County. She grew up in Tarrytown and moved to Briarcliff Manor where she raised her family. She received her MPA from Pace University and worked many years in the Human Resources field. She held the title of Vice President of HR for the largest teaching hospital in Westchester and Director of Classification and Compensation for one of the largest employers in Westchester County. After a successful HR career, Eileen decided to retire to make a full time commitment to her real estate clients. Outside of work you can find Eileen on the Tennis, Platform, or Pickleball Court along with Hiking in Westchester or the surrounding counties.