While fixed rate loans have interest rates that stay the same over the life of the loan, an adjustable rate mortgage (ARM) fluctuates depending on the market, but usually has a cap limiting fluctuation. While both offer advantages, your circumstances can determine which might be right for you. An adjustable rate mortgage: Can be a popular option for new homeowners as they over great upfront savings. Have an initial fixed interest period. Cap how much a loan can adjust so borrowers can try to plan accordingly. Consider an ARM if you expect to make more money in the future, plan to move early in the life of your loan, or might refinance before your loan adjusts.
There are many types of fixed-interest rate mortgages, including 30-Year and 15-Year mortgages. They offer a clear view of the future, as borrowers are able to more accurately account for costs over the life of the loan. For those who want greater stability when planning their monthly costs, fixed-interest mortgages are popular.