An understanding the different types of mortgage

Sam

There are different types of mortgages available in the market, but the most common two mortgages are:

Fixed Rate Mortgage:
In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, normally 30 years. Shorter term fixed-rates, typically 15 or 20 years, carry lower interest rates, higher payments and less money paid out. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it.
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Adjustable Rate Mortgage (ARM):
It initially comes with interest rates and monthly payments lower than a fixed rate mortgage but may periodically rise or fall, as often as once or twice a year, depending on economic factors. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. If you know your income will rise to keep pace with an ARM's periodic adjustment and you plan to move in a few years, an ARM could be a good choice.
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