ARM vs. Fixed-Rate Mortgage:
If you’re raring to buy a home, chances are you’ll need a mortgage. But which kind of mortgage should you get?
Home loans aren’t one size fits all, but come in a variety of forms to suit home buyers in different circumstances. One good place to start figuring out your options is a mortgage calculator, where you can plug in various home prices and and have this sum broken down into monthly payments. Still, in addition to a home’s price, you should carefully consider the type of loan you get.
Two of the main types of mortgages home buyers consider getting are a fixed-rate mortgage and an adjustable-rate mortgage, or ARM.
So what’s the difference between these two types of home loans? In a nutshell, a fixed-rate mortgage has an interest rate that stays the same over the life of the loan. An ARM, by contrast, has an interest rate that changes over time.
Before you seek out mortgage pre-approval, let’s break down the pros and cons of each loan so you can decide which one is right for you.