Refinance: ARM & Fixed

Refinancing activity has peaked up again.
When buying or refinancing a property, you need to choose between a
fixed interest rate (that remains constant through the life of the
mortgage) or an adjustable (adjusted up or down - at specified times
during the mortgage term). Adjustable Rate Mortgages (ARM) will have
an initial interest rate lower than fixed rates but will adjust upward
(unless rates really fall) after a specified period.

ARM may be good choice if you are sure that you will not be owning the
home for an extended period (more than 5-6 years) of time. Today we
discuss Advantages of both types of mortgages. Tomorrow we will post
disadvantages of both.

Fixed: o No anxiety over interest rate fluctuations. o Since you know
what your payment will be for the life of the loan, you can budget more
easily. o No possibility of an interest rate change making your mortgage
amount suddenly unaffordable.

ARM: o Lower initial rate and so lower monthly payment. o If interest
rate declines your rate will also decline. o Easier to qualify for due to
lower monthly payment which increases your affordability too.