The SCOOP! Blog by ChangeMyRate.com®

Can You Afford an Adjustable-Rate Mortgage?

August 31st, 2015 4:45 AM by Jackie A. Graves, President

 

Points, down payment, annual percentage rate. Whether you have just figured out how much home you can afford or are trying to calculate whether a mortgage refinance makes sense for you, it’s important to understand the terms and what they mean for your mortgage options. Whichever mortgage you decide on has an impact on how much you will pay each month, how much you will pay overall, and how you need to handle your regular personal income and spending.

 

Fixed vs. Adjustable

A variable- or adjustable-rate mortgage is a loan where the interest rate is subject to change according to market fluctuations and terms, whereas a fixed-rate mortgage offers flat payments throughout the term of the loan. It may be easier to qualify for an ARM because payments in the early years are more affordable. They can be more complicated as they are available in a variety of terms, but enable buyers to account for future increases in income or improved economic environments. (You should know, for example, how long the initial rate lasts, how often the mortgage adjusts and what the maximum adjustment is in your payment is both for a lifetime and per adjustment.) Here’s a quick guide to the differences between fixed-rate and adjustable-rate mortgages.

Posted by Jackie A. Graves, President on August 31st, 2015 4:45 AM

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