Who will use a fixed rate mortgage (FRM)?
Usually, first-time homebuyers with good credit would go for a fixed rate mortgage (FRM) because of its stability. Adjustable rate mortgage (ARM) loans are considered too complex and are not recommended to borrowers who lack home buying knowledge and experience. Repeat homebuyers who don’t stay in their home for more than several years wouldn’t use a fixed rate mortgage (FRM). They don’t really need to pay principal on a home they are not keeping. Hybrid adjustable rate mortgages are recommended for that purpose. Investors also would rarely opt for a fixed rate mortgage if they are flipping properties – they would rather use ARMs to maximize their cash flow and avoid paying principal on property they bought to sell.
