Adjustable versus fixed-rate mortgages
Get to know the difference between a fixed-rate mortgage and an adjustable-rate, or variable-rate, mortgage. Watch this quick video to hear the pros and cons of both mortgages.
Summary
- Fixed-rate mortgages may offer predictability and stability with an interest rate and a monthly principal and interest payment that don't change.
- One type of Adjustable-Rate Mortgage, or ARM, is a 5/1 ARM, which has a fixed rate for the first five years that's generally lower than a fixed-rate mortgage. After the initial fixed period, the interest rate adjusts annually based on market conditions and your payment could go up.
- Fixed-rate mortgages may be a good option if you plan to stay in your home for a long time. On the other hand, an ARM might be a great option if you plan to move within a few years.
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