Fixed or Adjustable-Rate?

Fixed-Rate Mortgage

Features the same interest rate throughout the entire life of the loan. Provides stability and consistency, allowing borrowers to more easily budget housing costs.

Adjustable-Rate Mortgage

A standard ARM will begin with a lower interest rate than a fixed-rate loan, but then change its rate based on the overall market index rate. The lower interest rate offered by an ARM may allow qualified homebuyers to purchase more expensive homes, but rising rates could mean a higher monthly payment in the long run.

Hybrid ARM loans are fixed for a set period of time, and then change after that time.

Some ARMs also feature ceiling or floor rates to protect the borrower and lender in case of extreme rate fluctuation.

Which Loan Is Right For Me?

If you plan on living in this house long-term and current interest rates are low, then a fixed-rate loan may be for you. If you plan on moving in the near future or the current interest rate is higher, then an ARM may be a better choice.