Posted on: 14th Feb, 2011 03:08 am
I was just curious what is better a fixed or adjusted rate?
There is no definitive answer to the question: it depends. In general, with a fixed rate the bank takes all the risks, but you pay that with higher interests. With an adjustable rate, you take part or all the risk for interest rates that could go up or down, and there is a good chance that in the end you'll pay less than with a fixed rate.
The problem is that for some time you could pay a quite higher monthly payment than the one you started with, and you have to think if you could afford that.
If you want to understand better how ARMs work, you can try simulating mortgages on this website I recently translated to English: [URL Deleted]
[URL Deleted as per Forum Rules. Thanks]
The problem is that for some time you could pay a quite higher monthly payment than the one you started with, and you have to think if you could afford that.
If you want to understand better how ARMs work, you can try simulating mortgages on this website I recently translated to English: [URL Deleted]
[URL Deleted as per Forum Rules. Thanks]
IT depends on how long you may be in the home. Adjustables are good for the right person and the right reasons. However, fixed mortgage rates are still very low and if you are unsure how long you may be in the home you should just go with a fixed rate to be safe. The average homeowner only stays in their home between 5-7 years.