ARM vs. Fixed-Rate Mortgage Calculator Overview
There are two main types of mortgages, which are adjustable-rate mortgages (ARMs) and fixed-rate mortgages. Adjustable-rate mortgages can provide attractive interest rates, but your payment is not fixed for the entire term of the mortgage. Typically, an adjustable=rate mortgage has an interest rate that is lower than a fixed=rate mortgage. Depending on how often the interest rate adjusts and what interest rates are expected to do (go up or go down), ARMs can cost a borrower a lot less in the long run.
Since ARMs typically have lower interest rates, it is important to consider how long you will be in the home or how long you will have the mortgage. You also need to consider your ability to deal with possible adjustments in your monthly mortgage payment.
Fixed-rate mortgages have a fixed interest rate for the entire term of the mortgage loan. This is also means that the monthly mortgage payments are fixed for the entire term of the loan.