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Adjustable Rate Mortgage vs Fixed Rate MortgageBoth fixed rate and adjustable rate home loans have positives and negatives associated with them. Because every borrower has different needs and financial goals they must pick the right loan for them. But how do you know if you should take a fixed or adjustable rate mortgage?The Fixed Rate Mortgage One of the best selling points and advantages of fixed rate mortgages is that they offer predictability and stable payments. However it is their stable interest rate that some consider to be their disadvantage. In a fixed rate loan if market conditions allow for a lower interest rate you will have to refinance to get it. This means paying closing costs and having to deal with a refinance. With a fixed rate loan there really is no difference between lenders so when it comes to shopping for a fixed rate mortgage take the deal with the best rates and lowest closing costs. But many Borrowers tend to find better deals with mortgage brokers and lower closing costs with banks and credit unions. So decide what is more important to you and make your adjustable mortgage to fixed rate refinance choice accordingly. Adjustable Rate Mortgages (ARM) The main advantage that an adjustable rate mortgage offers is that they come with lower initial interest rates when compared to their fixed rate counterparts. A lower rate will allow you to qualify for and buy a more expensive home then you could with a fixed rate loan. Another great advantage to an ARM loan is that if the market allows lower interest rates your loan may adjust downward and give you lower payments with out the need to refinance. However if the market conditions dictate your loan payments and interest rate can increase as well, so always refer to your adjustable rate rider and know when your loan is set to adjust. So Should I Get an Adjustable Or a Fixed Rate Adjustable rate mortgages are really only recommended when you know that you will be selling your home, refinancing your home or have an increased income when the loan begins to adjust. If you unsure of your future income or the possibility of selling your home is unlikely then you may want to skip the adjustable mortgage and go for the stability of fixed rate instead!  Custom Search
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