Types of mortgages
-- adjustable vs. fixed
Which is the better mortgage option for you: fixed
The low initial cost of adjustable-rate mortgages
(ARMs) can be very tempting to home buyers, yet they carry a great
deal of uncertainty. Fixed-rate mortgages (FRM)
offer rate and payment security, but they can be more expensive.
Here are some pros and cons of
ARMs and FRMs.
- Feature lower rates and payments early on
in the loan term. Because lenders can use the lower payment when
qualifying borrowers, borrowers can purchase larger homes than
they otherwise could buy.
- Allow borrowers to take advantage of falling
rates without refinancing. Instead of having to pay a whole new
set of closing costs and fees, ARM borrowers just sit back and
watch their rates fall.
- Help borrowers save and invest more money.
Someone who has a payment that's $100 less with an ARM than with
a FRM for a cou