fixed rate vs. arm
What is the primary difference between a Fixed Rate Loan and an ARM Loan?
A Fixed Rate Loan has a stable interest rate that remains unchanged throughout the loan term, while an ARM Loan has an initially low, adjustable interest rate that can change periodically.
What are the advantages of a Fixed Rate Loan?
Fixed Rate Loans offer predictable monthly payments, protection against rising interest rates, and long-term rate stability, providing peace of mind to borrowers.
How does an Adjustable Rate Mortgage (ARM) work?
An ARM starts with a lower interest rate for an initial period (e.g., 5 or 7 years) and then adjusts periodically based on a specific index. This can result in lower initial payments but potential rate increases later.
Are ARM Loans suitable for all borrowers?
ARM Loans can be suitable for borrowers who plan to move or refinance within the initial fixed-rate period or those who expect their income to rise to accommodate potential rate increases.
How often does the interest rate on an ARM Loan adjust, and is there a cap on rate increases?
The frequency of rate adjustments varies but is typically annually. ARM Loans usually have caps on how much the rate can increase annually and over the loan's lifetime.
What resources are available to help me decide between a Fixed Rate Loan and an ARM?
Our mortgage experts can provide personalized guidance based on your financial situation and goals. Schedule your consultation today!