Fixed-Rate vs. Adjustable-Rate Mortgages
What is a fixed-rate and an adjustable-rate mortgage?
Fixed-rate mortgage: A fixed-rate mortgage charges a set interest rate that’s determined when you take out the loan. This rate will not change throughout the entire time it takes you to pay the loan off. Adjustable-rate mortgages: The interest rates for adjustable-rate mortgages (ARMs) vary rather than remain constant. While the initial interest rate of an ARM stays constant during the introductory period, it may go up or down based on the index it’s tied to after this period ends.
Benefits of fixed-rate mortgages
- Easy budgeting: Because fixed-rate mortgages remain constant each month, you always know how much you must pay. As such, budgeting to pay off fixed-rate mortgages is often much easier and less stressful than budgeting for a loan whose rates may fluctuate.
- No surprises: The stability of fixed-rate mortgages is attractive to people who don’t appreciate surprises. Because your rate is set, you won’t have to worry about not being able to afford your payment if interest rates suddenly increase based on economic changes.
Benefits of adjustable-rate mortgages
- Lower interest rates: The interest rates of adjustable-rate mortgages often start out lower than those of fixed-rate mortgages. As such, your monthly payment will typically be lower and more manageable.
- Less refinancing: If interest rates fall, people with adjustable-rate mortgages can take advantage of lower monthly payments without having to completely refinance.
If you’re looking for a financing option for your home, Streamline Mortgage offers a wide variety of mortgage loans to choose from. As one of the best hard money lenders in Las Vegas and Reno, we’re committed to helping you find the financing option that works best for you—whether you’re looking for a long-term loan, a fixed-rate loan, or a shorter adjustable-rate mortgage. For more information regarding our loan options and services, contact us today.