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An ARM or Fixed-Rate Mortgage – Which is right for you?

Choosing between an adjustable and fixed-rate mortgage is a matter of knowing your options and weighing the benefits against the downsides of each.

Before you start looking at loans, ask yourself these questions:

  • What is my credit and employment history?
  • How much can I afford to spend on a home?
  • How long do I plan to stay in the home?

Answering these questions will help you choose the loan that works the best for your current situation.

Adjustable-Rate Mortgages

The most attractive feature of an adjustable-rate mortgage is the initial low rates. Because ARMs are subject to rate adjustments later, the initial interest rate is set lower than standard fixed rates. This rate provides you with initial lower payments for increased purchasing power. The disadvantage is that rates can change frequently and surpass the current fixed rate over time. Payments will also increase with each rate increase.

Fixed-Rate Mortgage

This “traditional” type of loan has a set interest rate throughout the entire life of the loan and protects you from increases in monthly loan payments due to market fluctuations. Any change in monthly loan payments will be due to increases in other charges like insurance or real estate taxes that naturally occur over time.  The disadvantage of a fixed-rate mortgage is that when interest rates are high, qualifying for this loan can be more difficult because the payments are less affordable, and your purchasing power is decreased.

15/15 Adjustable-Rate Mortgage--The Best of Both Worlds

With BCEFCU’s 15/15 Adjustable-Rate Mortgage you get the benefits of both adjustable and fixed-rate loans. The low introductory rate remains fixed for the first 15 years, adjusts once in year 16, and remains fixed for the remaining 15 years. This is a great option if you are planning to move or sell your home after 15 years. You can also refinance your loan without penalty before the adjustment.

Whether you’re buying your first or latest home or refinancing your forever home, we have a loan for that. Learn more about adjustable-rate, fixed-rate, and popular 15/15 adjustable-rate loans on our mortgage page. We also finance residential vacation and investment properties for up to 15 years. Contact a Mortgage Officer at 410-828-4730, 800-234-4730 or mortgages@bcefcu.com to learn more.

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