Fixed-rate and adjustable rate mortgages are the two most common mortgages available, but many people do not know which mortgage to choose for their financial situation.
A fixed-rate mortgage sets a rate of interest that remains the same through the loan period. This makes it easy for homeowners to factor mortgage payments into their budgets. Fixed-rate loans also protect homeowners from sudden jumps in monthly payment should interest rates spike. In contrast, an adjustable rate mortgage (ARM) changes over the loan’s lifetime. The rate starts at below the market rate of a more-or-less equal fixed-rate loan, then increases over time.
The idea of gradually rising interest might make fixed-rate mortgages seem the more attractive option, but an ARM is a good choice for homeowners who believe they can pay off their mortgage, or plan to move, before interest rates climb too high.
About WEI Mortgage Corporation: Founded in 2002, WEI Mortgage Corporation is a direct mortgage lender and a leader in the lending industry.