also related to How to choose between FRMs and ARMs?

calculators

• Which is better: fixed or adjustable?
• Should I pay points to lower the rate?
• Which is better: 15- or 30- year loan term?
• Am I better off refinancing?
• What will my refinancing costs be?
• Which lender has the better loan?
• Which loan is better?

• Check today's mortgage rates in your area
• Get free quotes from local mortgage brokers

Do you have the best loan? Loan.com's Loan Analyzer can help you find out.

How to choose between FRMs and ARMs?

Because there's such a wide variety of fixed and adjustable rate mortgages, there's no simple answer.

The primary benefits of a fixed-rate mortgage are that you always know what your mortgage payment will be, and you're protected from interest rate increases. Those two facts alone make fixed-rate mortgages more appealing to someone who's living on a fixed income or tight budget.

The main benefit of an ARM is that the introductory interest rate is low and, consequently, so are the payments. You run the risk, however, of having your payments jump if interest rates unexpectedly skyrocket.

What you want to do is compare the fixed-rate interest with a worst case scenario for the ARM and see which is better for you.

The following are some things to look for when you compare the two:

Generally, you should choose the fixed-rate mortgage if:

• the ARM you're considering doesn't have a rate adjustment cap
• you'd be unable to refinance an ARM before, or at the end of, the introductory rate period
• you wouldn't be able to afford the increased payments once your ARM's interest rate begins to increase

Generally, you should choose the ARM if:

• you can get one with a 1% - 1½% rate adjustment cap
• you can (and will) refinance before, or at the end of, the low introductory rate period
• you're certain that your finances could handle an increased mortgage payment

Above all else, we recommend that you consult with a reputable mortgage person or a financial advisor before making a final decision.

See the Lowest Local Mortgage Rates
from Ethical Lenders

Loan Purpose State
First Mortgage Home Equity Select... Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Loan Type Loan Amount
Select... 30 Year Fixed 20 Year Fixed 15 Year Fixed 3/1 ARM 5/1 ARM 7/1 ARM 10/1 ARM FHA 30 Year Fixed FHA 15 Year Fixed VA 30 Year Fixed VA 15 Year Fixed