ARM or Fixed: Which Is Better?

That’s a very good question and one you might have heard more than once. The question of an ARM vs. a Fixed Rate Mortgage is age-old and one the very first questions your loan officer might ask. You can do your own research about which is better but the answer might very well be neither. Or both. Or maybe just one of them. Confusing? It shouldn’t be but there are times when the answer is pretty much automatic while at other times it takes a bit more thought. Let’s explore the questions you should ask and answer to help guide you the rest of the way.

A fixed rate loan is pretty basic. The interest rate you choose when you lock in your loan is the rate is the same rate throughout the life of the loan. A fixed rate never changes. It’s fixed. An ARM, or an adjustable rate mortgage, can adjust over the life of the loan but only under the provisions set forth in your note.

An ARM has an index on which the rate is based plus a margin that is added to it. A common index today would be a 1-Year Treasury or a 1-Year Constant Maturity Treasury, or CMT. A margin might be 2.00 or 2.25. If the 1-Year CMT is 1.00 and the margin is 2.25, the new rate on which your payment is based is then 3.25% and will remain so until the next adjustment one year from now.

Most ARMs today come in the form of a hybrid mortgage where the interest rate is fixed for an initial period of time, say three or five years after which it turns into a rate that can adjust annually. So which is better? More specifically, what is better for your situation?

If you plan on keeping a mortgage for an extended period of time then a fixed rate might be the better choice due to the stability of the rate. ARMs and hybrids will have a lower start rate compared to a fixed. That means if you’re going to keep a mortgage for a relatively short period of time say only three, five or seven years, then an ARM or a hybrid is probably your better bet.

LOOKING FOR WHERE TO GET A LOAN? APPLY WITH US NOW!!!
Do you need a quick loan? Apply for a loan online with us. Zion Finance - Lend Up, is an Internet-based direct-to-consumer lender. We specialize in providing loans for customers with less-than-perfect credit. We can help you with a genuine home loan. Our loan services include...

1. PERSONAL LOANS
2. BUSINESS LOANS
3. MORTGAGE / HOME LOANS

Amount ranges from $3000 to $20 million. Repayment period is between 6 months to 25 years. We offer secured and Unsecured loans. Even without a collateral, we can still provide you a good loan.

To apply for a loan contact our e-mail: zionloanfirm.ltd@aol.com

Comments

I need a loan - Get an Instant Loan Here!

LOOKING FOR WHERE TO GET A LOAN? APPLY WITH US NOW!!! Do you need a quick loan? Apply for a loan online with us. Instant Loan, is an Internet-based direct-to-consumer lender. We specialize in providing loans for customers with less-than-perfect credit. We can help you with a genuine loan. Our loan services include... 1. PERSONAL LOANS 2. BUSINESS LOANS 3. MORTGAGE / HOME LOANS Amount ranges from $3000 to $20 million. Repayment period is between 6 months to 25 years. We offer secured and Unsecured loans. Even without a collateral, we can still provide you a good loan. We give loans worldwide - to any country. Talk to us now! To apply for a loan contact our e-mail: instantloans.plc@gmail.com

Looking for a Small Business Loan?

Over the past 5 years there has been a huge increase in the options available to small business owners looking for financing. It’s a lot easier these days to get financing that it was 10 years ago. However, with so many choices, it’s a lot more difficult to figure out which option is best for your small business. Rosalyn James, the CEO of Instant Loan provided some comments and advice on business financing to writer Henry Kivitt at Small Business Central. Apply for a business loan with Instant Loan below. Do you need a business loan? Apply for a business loan online with us. We can help you with a genuine loan to start a business or even to expand your existing business. We also lend personal loans, auto loans, truck loan, equipment loans, debt consolidation loans, home loans, mortgage loans, agricultural loans, small business loan and commercial business loans. Amount ranges from $3000 to $20 million. Repayment period is between 6 months to 25 years. We offer secured and Unsec...

WILL A TEMPORARY LOW INTEREST RATE AFFECT YOUR MORTGAGE CHANCES?

The September meeting of the U.S. Federal Reserve board did not increase the federal funds interest rate which affects the rates given to other financial instruments such as car loans and home mortgages. Although a rate hike was expected in September, the Feds nixed that plan, citing that the American economy wasn't strong enough as the prime reason. The Feds' decision, however, created what could be considered a temporary low-interest rate for the American housing market. How this will affect home buyers is unclear as how much the Fed will raise base interest rates is still unknown. All indications point to an interest rate hike that will happen soon, most likely by the end of 2015. If the rate hike is around 0.25%, homeowners will hardly notice the difference. The difference will come when, and if, the Fed continues to hike interest rates as the economy improves. Most experts agree that a 25 or 50 point rise in interest rates won't produce a visible effect on the e...

Instant Loan Company

Search This Blog