Terms to consider when choosing a mortgage:
Fixed-Rate
Mortgages – a fixed-rate mortgage means
the interest rate and principal and interest payment remain
the same for the entire life of the loan.
Advantages -
- Consistent principal and interest payment
make this loan stable.
- Your rate will not change
so whatever is happening in the market will not affect
your loan payments.
- This is a good choice if you
are likely to stay in your home for a long time.
Adjustable-Rate Mortgages – an adjustable-rate
mortgage (ARM) means that the interest rate and monthly
payment will change over the life of the loan, according
to the terms which are specified in advance.
Advantages –
- The initial interest rate is usually lower
than with a fixed-rate mortgage.
- The initial monthly payment will
also be lower.
- The interest rate will be adjusted (up or
down) and the monthly payment will then increase or decrease.
- ARMs are a good choice for homeowners who are not planning
to stay in their home.
