Understanding Different Mortgage Types: A Guide for Homebuyers
Posted by Matt Kanoudi on
Choosing the right mortgage is a crucial decision when buying a home. Different mortgage types offer varying terms, interest rates, and monthly payments. Let's explore some of the most common options:
Fixed-Rate Mortgages
How it works: With a fixed-rate mortgage, your interest rate remains the same throughout the loan term.
- Pros:
- Predictability: Consistent monthly payments, making budgeting easier.
- Stability: Protection against rising interest rates.
- Cons:
- Potentially higher initial rates: If interest rates are low, you might miss out on a better deal.
Adjustable-Rate Mortgages (ARMs)
How it works: An ARM's interest rate fluctuates over time, typically tied to an index like the prime rate.
- Pros…
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