Why would I choose an ARM over a fixed rate mortgage?

An adjustable rate mortgage can be appealing because it offers a lower interest rate than a fixed rate loan.  The lower rate of course makes for a lower monthly mortgage payment.  A lower monthly mortgage payment can be used to qualify for a larger loan or simply allow for a less expensive loan for a borrower who did not intend to keep the loan for a prolonged period of time.  The risk with the adjustable rate loan is that the rate is adjustable and the interest rate as well as the monthly payment may rise in the future.  The mortgage comparison calculator is a useful tool to compare the interest rate sand payments of different loan types.  There are several different types of adjustable rate mortgages available.  It is important to understand the conditions of each loan type.  Use the adjustable rate mortgage calculator to experiment with loan types and different interest rate scenarios to get a true feel for the impact of these loans.

This entry was posted on Wednesday, December 10th, 2008 at 8:43 pm and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.