If rates are low and you plan to stay in your home for more than a few years, you should probably go with a fixed rate home loan. However, if you expect to move soon or need to have lower payments now but anticipate being able to pay higher payments later (for example, you anticipate a pay increase), then you might prefer an ARM.
Fixed Rate Advantage:
• Monthly payment remains the same over the life of the loan, regardless of what happens to interest rates.
ARM Advantage:
• Potential to obtain higher mortgage
• Possible lower initial payments and interest rate
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