What Are the Differences Between ARMs and Fixed-Rate Mortgages?
If you’re like most people buying a home for sale in Jasper, Huntingburg, Evansville or another Indiana community, you know you have a lot of options when it comes to mortgage products – and among them are fixed-rate mortgages and adjustable-rate mortgages, or ARMs. So what are the differences between ARMs and fixed-rate mortgages, and what’s right for you? This guide explains.
What Are the Differences Between Fixed-Rate Mortgages and ARMs?
There are two main types of mortgages: fixed-rate and adjustable-rate. You should talk to a financial professional before you decide which type of mortgage is right for you, but here’s a quick run-down on the differences between them.
Fixed-Rate Mortgages
In a fixed-rate mortgage, your interest rate stays the same for the life of your loan. If you take out a 30-year fixed-rate mortgage at 3.9 percent interest, that’s what your interest rate will be today, next year, and 29 years and 11 months from now. The only way to change your interest rate is to refinance your home – that is, take out a new mortgage.
The upside is that you always know what your monthly mortgage payments will be (not accounting for property tax, which can change and can affect your payments when your lender is involved). That way, you can budget accordingly.
Search Dubois County Homes for Sale Here
1895 Gun Club Road Jasper, Indiana
7 Beds 8 Baths 12,729 SqFt 10.370 Acres
Listing courtesy of Brenda Krempp from RE/MAX Local.
938 E Jasper Dubois Road Jasper, Indiana
5 Beds 4 Baths 5,700 SqFt 6.100 Acres
Listing courtesy of Kevin Bayer from RE/MAX Local.
3289 St Charles Street Jasper, Indiana
4 Beds 4 Baths 3,906 SqFt 0.595 Acres
Listing courtesy of Annette Wigand from ERA FIRST ADVANTAGE REALTY, INC.
1928 S A St. Jasper, Indiana
3 Beds 4 Baths 3,376 SqFt 6.258 Acres
Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
5070 W Alder Creek Drive Jasper, Indiana
4 Beds 3 Baths 4,208 SqFt 1.500 Acres
Listing courtesy of Stephanie Hasenour from RE/MAX Local.
4536 W 150 N Jasper, Indiana
4 Beds 4 Baths 2,986 SqFt 1.482 Acres
Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.
1525 Grandview Drive Jasper, Indiana
3 Beds 3 Baths 4,132 SqFt 0.354 Acres
Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.
3237 Dogwood Drive Jasper, Indiana
3 Beds 4 Baths 4,326 SqFt 0.675 Acres
Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
247 N Westlin Drive Jasper, Indiana
3 Beds 3 Baths 2,849 SqFt 0.999 Acres
Listing courtesy of Annette Wigand from ERA FIRST ADVANTAGE REALTY, INC.
836 W 20th Street Jasper, Indiana
3 Beds 3 Baths 4,376 SqFt 0.590 Acres
Listing courtesy of Elizabeth Mehringer from RE/MAX Local.
1245 W 6th Street Jasper, Indiana
4 Beds 3 Baths 3,610 SqFt 1.300 Acres
Listing courtesy of Steve Wigand from ERA FIRST ADVANTAGE REALTY, INC.
872 S Countryside Drive Jasper, Indiana
3 Beds 2 Baths 3,498 SqFt 2 Acres
Listing courtesy of Linda Schroering from CENTURY 21 SCHROERING REALTY.
3255 E State Road 164 Jasper, Indiana
4 Beds 3 Baths 2,944 SqFt 1.024 Acres
Listing courtesy of Zach Holt from Whitetail Properties Real Estate.
1911 S A St. Jasper, Indiana
3 Beds 2 Baths 1,468 SqFt 0.314 Acres
Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
1761 Sugar Pine Drive Jasper, Indiana
3 Beds 2 Baths 1,829 SqFt 0.346 Acres
Listing courtesy of Ryan Craig from RE/MAX Local.
Adjustable-Rate Mortgages
An adjustable-rate mortgage has an interest rate that varies. Typically, you get a below-market interest rate; that means it’s lower than what most people are paying for fixed-rate mortgages.
The initial interest rate – the one you pay during your introductory period, which is usually 3, 5, 7 or 10 years – stays the same. After your introductory period, your interest rate will adjust based on current market conditions; it adjusts at specific intervals, so you’ll know when your interest rate is going to change.
Usually, there’s a cap on the amount of interest your lender can charge you on an adjustable-rate mortgage. Additionally, if you find that your interest rate gets too high, you may be able to refinance your loan and secure a lower interest rate.
Related: Can you buy a FSBO when you’re working with a real estate agent?
How Do You Know Whether a Fixed-Rate or Adjustable-Rate Loan is Right for You?
The only way to tell what type of loan is right for you is to talk to a financial professional. You should consider:
- How much money you have saved for a down payment
- Whether you can afford to make mortgage payments if interest rates go up, which they’re likely to do
- Whether you intend to live in the same home for a long time or you intend to sell it fairly quickly
Are You Thinking of Buying a Home in Dubois County?
Use our site to search homes for sale in Jasper, Dubois, Spencer, Martin and Davis counties, as well as all the surrounding communities. Unlike the “big name” sites out there, at Sell 4 Free Welsh Realty, our site is directly connected to our local MLS. We update it with new homes every hour.
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View the newest homes listed in Dubois County in the last 10 days:
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1895 Gun Club Road Jasper, Indiana
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Listing courtesy of Brenda Krempp from RE/MAX Local.