Fixed Rate vs. Adjustable Rate (ARM) Mortgage Loans
Fixed rate loans are often the choice for homeowners, since for fixed rate loans the interest rate is set when you take out the loan and will not change. On the other hand, the adjustable rate loans the interest rate may go up or down.
As you can see, fixed rate loans can offer stability on repayments, while the adjustable rates may pose a threat to the homeowner. Thus, the interest rates make a difference in the payoff of home equity loans. If the homeowner is paying more toward interest and less toward mortgage, then the term of the loan is often the length of payoff.
Adjustable Rate Mortgage Loans may appeal to homeowners who want lower starting payments or relocation flexibility. Just make sure that if rates rise after the introductory period, your income can handle the higher monthly payments. Of course, if interest rates stay low or even fall, adjustable-rate mortgages can potentially save you a lot of money.
If you are currently in an adjustable rate mortgage (ARM) you may want to consider refinancing into a fixed rate loan if constant rates and payments and budgeting stability are important to you.
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