Decide between a fixed rate mortgage and adjustable rate mortgage 

Deciding between a fixed rate mortgage and adjustable rate mortgage will depend on your current economic situation and your future financial plans. With a fixed rate mortgage (FRM), your monthly payments will be steady. In contrast, with an adjustable rate mortgage (ARM), your payments will low to start but vary over time.

An adjustable-rate mortgage, or ARM, differs from a fixed-rate mortgage in that the interest rate and monthly payment move up and down as market interest rates fluctuate. Most ARM's have an initial fixed-rate period during which the borrower's rate doesn't change, followed by a much longer period during which the rate changes at preset intervals. The rates charged during the initial periods are generally lower than the rates found on comparable fixed-rate mortgages. After all, lenders have to offer borrowers something to make it worth their while to assume the risk of higher rates in the future.

There are several types of mortgages that Lenders offer, but the most common type are fixed-rate mortgage or FRM. These loans feature fixed rates and monthly payments, generally for 15-year and 30-year periods. These types of loans are popular because consumers do not like the thought of their house payment rising and falling with interest rates. With this type of mortgage your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable. Fixed-rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)

There are also mortgages that combine aspects of fixed rate mortgage and adjustable rate mortgage - starting at a low fixed-rate for seven to ten years, for example, and then adjusting to market conditions. Ask your mortgage lender about these and other special kinds of mortgages that fit your specific financial situation.

For more information on a Fixed Rate Mortgage or Adjustable Rate Mortgage, or to choose from a variety of related products and services, choose from the following:

 Mortgages | Car Loans | Home Equity Loans | Student Loans | Payday Loans

    Page Topic -Decide between a fixed rate mortgage and an adjustable rate mortgage