Fixed Rate or Adjustable Rate Mortgage

Fixed Rate or Adjustable Rate Mortgage  

Along with other decisions you will find yourself making while shopping for a mortgage, you will be deciding whether to take a fixed-rate mortgage (FRM) or an adjustable rate mortgage (ARM).  

As the name implies, the interest-rate of an FRM will remain the same throughout the life of the loan. If interest rates are low when you are buying or refinancing a home, an FRM is a good choice, because you can lock in that low interest rate.

ARMs, however, will fluctuate as interest rates rise and fall.  Your 6 percent rate today could drop to 5 percent next year or end up at 8 percent if the market rate goes up.  

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