No, it's not a wrestling match you can catch on pay-per-view.
It's the difference between Fixed-rate mortgages and Adjustable-rate mortgages.
Alright then… So what's the difference?
A fixed-rate mortgage is set in place and cannot change over the whole life of a loan.
When you consider that most loans are split into 15 or 30 year plans, that's a huge commitment!
But there are some advantages to FRMs that are worth considering…
One of the biggest advantages is that an FRM isn’t influenced by current market rates.
This makes it much easier for borrowers to set budgets and account for any unexpected changes that arise.
On the other hand, an ARM can have its interest rate increase or decrease during specific adjustment periods.
So the main risk of ARMs is that, due to changing interest rates, mortgage payments may skyrocket beyond a borrower’s reach.
Maybe you get in at the right time, lock in the FRM right before inflation drives the rates up…
Or maybe you are getting a mortgage in a time of economic struggle, and you like the idea of the rate getting better over time.
The choice is yours, so choose wisely!
And if you’re having trouble making the decision, just reply to this email or give us a call so we can point you in the right direction :)
