What is the difference between fixed rate mortgages and adjustable rate mortgages?
Fixed rate mortgages are offered with an interest rate that remains unchanged for the term of the loan. Adjustable rate mortgages — sometimes referred to as ARMs or variable rate mortgages — have rates that change at predetermined intervals during the term to reflect prevailing interest rates. What is a “convertible mortgage”? This is a mortgage that allows a borrower to convert from an adjustable rate to a fixed rate during specified time periods. An extra fee usually applies.
• Fixed rate mortgages are offered with an interest rate that remains unchanged for the term of the loan. • Adjustable rate mortgages — sometimes referred to as ARMs and also called variable rate mortgages — have rates that change at predetermined intervals during the term to reflect general interest rates.
The differences are as follows: Fixed rate mortgages are offered with an interest rate that remains unchanged for the term of the loan. Adjustable rate mortgages — sometimes referred to as ARMs or variable rate mortgages — have rates that change at predetermined intervals during the term to reflect prevailing interest rates.
The differences are that fixed rate mortgages are offered with an interest rate that remains unchanged for the term of the loan. Adjustable rate mortgages, sometimes referred to as ARMs and also called variable rate mortgages, have rates that change at predetermined intervals during the term to reflect general interest rates.
Fixed Rate Mortgages are loans in which the interest rate never changes during the life of the loan. As a result, the principal and interest payment also does not change during the life of the loan. The benefit of a fixed rate mortgage is you can lock your interest rate for as long as 40 years to protect yourself against rising interest rates.
