Fixed Rate VS. Adjustable Rate Mortgages

The Lowdown on the Fixed-Rate & Adjustable Rate Mortgage...

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Choosing the Right Mortgage

Understanding Your Options

 

Fixed Rate Mortgage

Make fixed payments for the life of the loan

If you’re looking for the predictability of a fixed payment, look no further than a fixed-rate mortgage. This mortgage type offers a set interest rate, resulting in a fixed payment amount that will not change over the life of the loan. It’s particularly popular with first-time home buyers, and anyone who finds it easier to budget and plan around the predictability of a fixed payment. Loan lengths vary, but the most common term is 30 years.

Ideally Suited For:

  • People seeking the predictability of a fixed payment
  • Those planning to stay in their home for a long period of time
  • Looking to protect yourself from rising interest rates in the future

Loan Features:

  • Fixed rate terms range from 10 to 30 years
  • Stable payment and rate
  • Wide range of loan options available – ask an EHL Loan Consultant for more information!

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Adjustable Rate Mortgage

Get the lowest rate available today

As the name implies, adjustable rate mortgages (ARMs) have interest rates that change over the lifetime of the loan. Most ARMs are hybrids, which means they have an initial fixed-rated period, after which the interest rate begins to change, usually once per year. You may see this written as 5/1 or 7/1. This means that you get five or seven years of a fixed interest rate, and after that, the interest rate -- and your payments -- will be adjusted every year. 

Ideally Suited For:

  • Those who don’t plan to live in the property long enough for the rates to rise
  • Homebuyers who are interested in lower initial payments, and are comfortable with rate adjustments
  • The Pay It Off Type - those who have the cash to pay off or pay down substantially the loan before the new interest rate kicks in
  • The Bump Up Income Earner – those who expect to see an increase in their income, (going with an ARM could save you from paying a lot of interest over the long haul)

Loan Features:

  • ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. For example, in a 5/1 ARM, the 5 stands for an initial 5-year period during which the interest rate remains fixed while the 1 shows that the interest rate is subject to adjustment once per year thereafter.
  • Lowest possible initial rate and initial payment
  • Find out what loan options are available – ask an EHL Loan Consultant can help!

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Learn more about the Fixed-Rate and Adjustable Rate Mortgage to see which one best fits your situation, in our video here.

 

 

Mortgages Aren't One Size Fit All...

To pick the right one for you, it’s important to understand what makes them different, since there are many products and programs.

Your Emerald Home Loans Consultant will help you choose which is best for your specific scenario. But first, it’s important to have working knowledge of the basics. Watch our Fixed-Rate VS. Adjustable Rate Mortgage video to learn more!

Fixed vs. Adjustable Rate Mortgages WATCH OUR VIDEO >>

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  • Fixed Rates
  • Adjustable Rates (ARM)
  • Minimal Down Payments
  • Terms from 5 to 30 Years

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