Posted on: 27th Sep, 2011 06:31 am
A fixed rate mortgage means that you do not have to worry about interest rate fluctuations in the future on your home. this means that the mortgage has a fixed interest rate that will remain the same regardless of whether market interest rates rise or fall. The rate is "locked in."
A variable rate Mortgage is the opposite of this. A mortgage with an adjustable interest rate changes with the market interest rate. The mortgage holder is protected by a ceiling, a maximum interest rate that is paid, which might be reset annually. Adjustable Rate Mortgages (ARM's) usually start with better rates than fixed rate mortgages to compensate for the higher interest rate the borrower may pay in the future.
Would the community agree that a fixed rate is better than an ARM, or vise versa?
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A variable rate Mortgage is the opposite of this. A mortgage with an adjustable interest rate changes with the market interest rate. The mortgage holder is protected by a ceiling, a maximum interest rate that is paid, which might be reset annually. Adjustable Rate Mortgages (ARM's) usually start with better rates than fixed rate mortgages to compensate for the higher interest rate the borrower may pay in the future.
Would the community agree that a fixed rate is better than an ARM, or vise versa?
[size=9:d49b615218][color=Red:d49b615218][External links deactivated as per forum rules. Thanks.][/color:d49b615218][/size:d49b615218]
i personally feel that fixed rate is a better option compared to an arm as the rates remain fixed and are no affected by the rise or fall in the market interest rates. in case if rates fall, the borrower can refinance the mortgage and take advantage of the lower rates.
Hi mortgage!
A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan.
:idea:
A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan.
:idea:
You may be confused with whether to opt for fixed rate or variable rate mortgages. Both have some advantages as well as disadvantages. The type of mortgage that you will pick depends upon mental set up - whether you are a risk taker or a risk averse.
Fixed rate mortgages are better because the rate of interest on the mortgage stays the same all throughout the loan term. In case of adjustable rate mortgage, then you can get a lower rate in the initial period, the rate of interest will change after a certain period of time.