A little blog where I explore home equity loans
Generally speaking, the longer your mortgage loan's terms are, the higher the differences in costs will be with fixed rate mortgages compared to adjustable rate mortgages. If the mortgage borrower plans to stay in their house for many years and believes that interest rates may go up, then the premium today could be a substantial savings tomorrow. Adjustable rate mortgages (ARMs) Adjustable rate mortgages attend to provide a homeowner with a lower initial interest rate but more uncertainty about interest rate and payment changes in the future. With adjustable rate mortgages, the interest rates are dependent on general interest rates or what is known as an index. Many adjustable rate mortgages are considered 'hybrid mortgages' and have a fixed introductory period of 1, 3, 5 or 7 years during which time the interest rate does not change.