Fixed or ARM Mortgage Rates

Is a Fixed Rate or an Adjustable Rate Mortgage (ARM) right for you?

Deciding which loan makes the most sense for your goals and financial situation means understanding the benefits of each type.

Whether you are buying a home or refinancing, there are 3 basic types of home loans.

Let’s take a look at the reasons to help you make the best choice.

1. Fixed Rate Mortgage

Fixed rate mortgages usually have terms lasting 15 or 30 years. Throughout those years, the interest rate and monthly payments remain the same. You would select this type of loan when you:

  • Plan to live in home more than 7 years
  • Like the stability of a fixed principal/interest payment
  • Don’t want to run the risk of future monthly payment increases
  • Think your income and spending will stay the same

2. Adjustable Rate Mortgage

Adjustable Rate Mortgages (often called ARMs) typically last for 15 or 30 years, just like fixed rate mortgages. But during those years, the interest rate on the loan may go up or down. Monthly payments increase or decrease. You would select this type of loan when you:

  • Plan to stay in your home less than 5 years, 7 years or 10 years
  • Don’t mind having your monthly payment periodically change (up or down)
  • Comfortable with the risk of possible payment increases in future
  • Think your income will probably increase in the future

3. Combination Rate Mortgage

Combination rate mortgages combine fixed interest rates and adjustable interest rates. Lenders often refer to these loans as hybrid loans. For the first few years (3-7), the interest rate is fixed. It remains the same and so does your monthly payment. During the remaining years of the loan, your interest rate becomes adjustable and can vary. You would select this type of loan when you:

  • Want the stability of a fixed principal/interest payment in the short term
  • Want to repair your credit by demonstrating your ability to make regular payments, then refinance for a lower interest rate
  • Have a lot of consumer debt (these loans typically allow more)
  • Want to borrow more and get a lower monthly payment than a standard fixed rate loan

Need more information about deciding which is right for you? Give Jackie a call and she will make sure you choose the right loan with the right program at the right price.  Call Jackie at 949 600-0944

Jackie Barikhan

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