Don’t worry - you’re not the first person to ask this question. Understanding the ins and outs of any major financial decision you make for yourself or your family is an extremely important part of the process, and at Midland Mortgage, we want to help you make the choice that will be best for you.
Fixed Rate and Adjustable Rate Mortgages can have variations within their own type of mortgage, but these are the two standard mortgage options available in lending. Let’s take a closer look at each of these.
A fixed rate mortgage is considered to be the more straightforward option. You will be aware beforehand what your interest rate is going to be for the entirety of your mortgage period, and the amount of your monthly payments will be set. This option appeals to many home buyers for the stability it offers and because it removes the possibility of a fluctuation in rates. The most popular duration for a fixed rate mortgage is a 30-year period, though there are other options as well.
Often referred to as an ARM, an adjustable rate mortgage typically starts with a period of time during which the interest is set below the current market rate, but begins to rise once that initial period of time is up. The lower payments for the first, fixed years of an ARM are appealing to many home buyers because it allows them to take on a larger total loan without the immediate financial squeeze. While this type of mortgage can work out to the advantage of the buyer, if you’re unable to pay the loan back in a timely manner, you could see unpredictable fluctuations in your payments as the interest rate changes over time.
There are benefits to both types of mortgage loans, and at Midland Mortgage, we can help you decide which loan is best suited for your specific situation and financial needs. If you would like to know more about the mortgage process and the loan that would benefit you best, contact us today. We look forward to working with you.