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catharin9 · Joined: 14 Jul 2009 Posts: 168 -0.14 Dollars($)

Is a fixed rate or adjustable rate mortgage better?

robertcampbell07 · Joined: 25 Aug 2009 Posts: 52 -0.11 Dollars($)

right now mortgage rates are low. therefore, better to go ahead with fixed rates.

secondly, we should also consider the duration of mortgage.

catharin9 · Joined: 14 Jul 2009 Posts: 168 -0.14 Dollars($)

But as a generic which is preferred?

elnoralittle · Posted: Sat Aug 29, 2009 9:48 am Post subject:

perferred is a fixed rate.
Your 5 fixed rate won't change.
The adjustable rates can. Most have 5-2-5 caps...that means: in the first adjustment period the rate can't go up more than 5 points...then each year it can't go over 2 points after that...but over the life of the loan, it can't go up more than 5 points the original rate..so if you had a 5 % rate, it can go up to 10%...but 10% is the highest it can ever go.
Most people think...that would never happen...but it could, are you prepared to pay that high of a rate.
Most arms are for people who don't plan to stay in the home more than the adjustment period...or who can still afford it ..it's more of a circumstantial thing.
you also have to think, when the rate adjusts..will you be able to refinance out of it into a fix if you wanted. As we can see the market can change at any time.

robertcampbell07 · Joined: 25 Aug 2009 Posts: 52 -0.11 Dollars($)

elnoralittle, thanks for giving insight.

catharin9 · Joined: 14 Jul 2009 Posts: 168 -0.14 Dollars($)

thanks all

andrewward001 · Joined: 28 Aug 2009 Posts: 51 0.00 Dollars($)

hi,

its difficult to say exactly,its depands of Factors such as loan duration, the index used by the lender, the number and timing of rate adjustments, and your assumption about the increase/decrease of future interest rates all have an impact.

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