Deciding whether or not to finance your home using an adjustable versus a fixed rate mortgage is a very important decision. Each of these options has both strengths and weaknesses. However, the final decision comes down primarily to ones level of personal and financial risk, as well as to a simple matter of preference.
This short article will take a closer look at both types of loans with the intention of helping you make an informed decision.
A fixed rate mortgage is a good option for individuals who like being able to know exactly how much they will be required to pay on their mortgage each month. There are no surprises with a fixed rate mortgage. It is also a great option if one plans to stay in their home for the term of the loan or for at least quite a while. They also work well for individuals on a fixed income.
Fixed rate mortgages do have their disadvantages. For example, fixed rate mortgages are not as flexible as adjustable rate mortgages. If interest rates drop, one will not be able to take advantage of these savings unless they refinance. Also, the interest rates on fixed rate mortgages tend to be higher than the starting rates of adjustable...
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