Mortgages With Fixed Rates and Adjustable Rate Mortgages

A mortgage with a fixed rate offers you security and helps you manage your monthly budget more effectively.

Fixed rate mortgages provide you with security, allowing you to focus on purchasing your home while knowing your loan payments will remain the same throughout its entirety. Interest rates are determined by several factors such as Treasury bond movement, lending industry trends and personal financial situation (credit score/income level).

The 30-year mortgage is the most popular fixed rate option, though shorter terms such as 15 or 20 years may also be available. Opting for a shorter loan term could help you pay off your mortgage faster and save thousands in interest payments over its life.

When looking into mortgage options, a fixed rate mortgage is your best bet if you want an established and predictable payment over the long haul. On the other hand, if interest rate volatility and its effect on household budget are worries, an adjustable rate mortgage may be better suited.

ARMs Are Often More Expensive Than Fixed-Rate Mortgages
An ARM may offer lower initial interest rates than fixed rate mortgages, but your payments could increase as the rate adjusts over time. Furthermore, you must be willing to assume the risk that interest rates could rise during your loan term.

This type of mortgage is popular because it offers predictability and stability, but can be more expensive than a fixed-rate mortgage. Therefore, only after you’ve owned your home for several years and feel confident that you can afford your mortgage without any changes to your budget should you consider an ARM.

An ARM loan may be the best choice for clients with a specific plan in mind, such as paying off their mortgage, selling their home, or refinancing before the original interest rate resets. Nonetheless, it’s important to remember that there are safeguards built into ARMs which protect homeowners from any unexpected increases to their monthly payments.

No matter which mortgage option you select, it’s essential to understand how your loan works so that you can make the best decision for your individual situation. Speak with a True North Mortgage lender and receive expert guidance on which option is most suitable for you.

Fixed-rate mortgages are generally amortizing loans, which means your monthly payments are spread out over a set period of time and part of each payment goes toward the principal. As time passes, however, the percentage that goes toward principal will gradually shift as equity in your property increases.

Many people opt for a fixed-rate mortgage over an adjustable-rate one, as it offers more security and stability throughout the course of the loan. Furthermore, it can be an excellent way to save money and build equity in your home.