To Fix or to Adjust, That Is the Question!

While the homebuying process can be a fun one, it can also be confusing, especially for those who are purchasing a home for the first time. One of the main questions people ask themselves when buying a home is whether they should choose a fixed-rate or adjustable-rate mortgage.

Which Mortgage Rate Is Right for You?

The main difference between fixed-rate and adjustable-rate mortgages is the interest rate.

For a fixed-rate mortgage, your interest rate stays the same throughout the duration of the loan. As a result, homeowners can easily budget each month for their mortgage because their monthly payment will remain roughly the same from year to year, with only slight adjustments if home insurance or property tax amounts fluctuate. Many homeowners choose this option because of this consistency. They don’t have to worry about one day having a higher payment due to an interest rate change. No matter what happens in the economy, their interest rate remains the same.

An adjustable-rate mortgage loan can change over the duration of the loan. Adjustable-rate mortgages tend to be appealing to future homeowners because of the fact they usually offer low payments at first. This also allows many to borrow a larger amount for a home loan. However, while this is appealing, consider the future. For instance, what the monthly payment may be for this year can change 10 months down the road. Yet, an adjustable-rate mortgage could benefit those who are looking at the near term for their home and finances.

Are you unsure about whether you should choose a fixed-rate or an adjustable-rate mortgage loan? Contact one of our knowledgeable and friendly associates today who can help you in making the right decision for you and your home!