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.
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- 5 Bedrooms
- 4 Bathrooms
- 5,700 Sq Ft
- 6.100 Acres
938 E Jasper Dubois Road Jasper, Indiana
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Listing courtesy of Kevin Bayer from RE/MAX Local.
- 4 Bedrooms
- 4 Bathrooms
- 3,906 Sq Ft
- 0.595 Acres
3289 St Charles Street Jasper, Indiana
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Listing courtesy of Annette Wigand from ERA FIRST ADVANTAGE REALTY, INC.
- 3 Bedrooms
- 4 Bathrooms
- 3,376 Sq Ft
- 6.258 Acres
1928 S A St. Jasper, Indiana
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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
- 4 Bedrooms
- 3 Bathrooms
- 4,208 Sq Ft
- 1.500 Acres
5070 W Alder Creek Drive Jasper, Indiana
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Listing courtesy of Stephanie Hasenour from RE/MAX Local.
- 4 Bedrooms
- 4 Bathrooms
- 2,986 Sq Ft
- 1.482 Acres
4536 W 150 N Jasper, Indiana
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Listing courtesy of Stacey Thieman-Wright from THIEMAN REALTY.
- 4 Bedrooms
- 3 Bathrooms
- 3,610 Sq Ft
- 1.300 Acres
1245 W 6th Street Jasper, Indiana
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Listing courtesy of Steve Wigand from ERA FIRST ADVANTAGE REALTY, INC.
- 4 Bedrooms
- 3 Bathrooms
- 2,944 Sq Ft
- 1.024 Acres
3255 E State Road 164 Jasper, Indiana
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Listing courtesy of Zach Holt from Whitetail Properties Real Estate.
- 3 Bedrooms
- 2 Bathrooms
- 1,468 Sq Ft
- 0.314 Acres
1911 S A St. Jasper, Indiana
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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
- 3 Bedrooms
- 2 Bathrooms
- 1,829 Sq Ft
- 0.346 Acres
1761 Sugar Pine Drive Jasper, Indiana
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Listing courtesy of Ryan Craig from RE/MAX Local.
- 3 Bedrooms
- 2 Bathrooms
- 2,374 Sq Ft
- 1.740 Acres
582 E 36th Street Jasper, Indiana
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Listing courtesy of KaraHinshaw from Key Associates Signature Realty.
- 4 Bedrooms
- 2 Bathrooms
- 2,736 Sq Ft
- 2 Acres
4307 W 570N Road Jasper, Indiana
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Listing courtesy of Steve Wigand from ERA FIRST ADVANTAGE REALTY, INC.
- 3 Bedrooms
- 2 Bathrooms
- 2,403 Sq Ft
- 0.287 Acres
1371 W 5th Street Jasper, Indiana
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Listing courtesy of Tama Stemle from RE/MAX Local.
- 3 Bedrooms
- 3 Bathrooms
- 2,212 Sq Ft
- 0.286 Acres
181 Ashbury Court Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
- 3 Bedrooms
- 2 Bathrooms
- 2,133 Sq Ft
- 0.424 Acres
1441 W Andrew Lane Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
- 3 Bedrooms
- 2 Bathrooms
- 2,322 Sq Ft
- 1.450 Acres
244 W State Road 56 Road Jasper, Indiana
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Listing courtesy of Stacey Hurst from RE/MAX REVOLUTION.
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?
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Newest Homes for Sale in Dubois County
View the newest homes listed in Dubois County in the last 10 days:
4307 W 570N Road Jasper, Indiana
4 Beds 2 Baths 2,736 SqFt 2 Acres
Listing courtesy of Steve Wigand from ERA FIRST ADVANTAGE REALTY, INC.
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.
401 S Walnut Street Huntingburg, Indiana
2 Beds 1 Baths 1,386 SqFt 0.240 Acres
Listing courtesy of Courtnay Begle from RE/MAX REVOLUTION.