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
- 5 Bathrooms
- 5,596 Sq Ft
- 0.890 Acres
3265 Foxridge Drive Jasper, Indiana
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Listing courtesy of Brenda Krempp from RE/MAX Local.
- 3 Bedrooms
- 4 Bathrooms
- 4,319 Sq Ft
- 1.600 Acres
1015 W 15th Street Jasper, Indiana
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Listing courtesy of Caroline Gobert from ERA FIRST ADVANTAGE REALTY, INC.
- 3 Bedrooms
- 2 Bathrooms
- 2,940 Sq Ft
- 14.820 Acres
1089 N 400W Jasper, Indiana
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Listing courtesy of Zach Holt from Whitetail Properties Real Estate.
- 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
- 2 Bathrooms
- 3,076 Sq Ft
- 1 Acres
3515 Villa Drive Jasper, Indiana
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Listing courtesy of Leanna Graves from RE/MAX REVOLUTION.
- 3 Bedrooms
- 3 Bathrooms
- 2,650 Sq Ft
- 0.780 Acres
3264 Lakeside Dr. Jasper, Indiana
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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.
- 4 Bedrooms
- 2 Bathrooms
- 3,490 Sq Ft
- 0.371 Acres
307 Newton Street Jasper, Indiana
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Listing courtesy of Tama Stemle from RE/MAX Local.
- 4 Bedrooms
- 4 Bathrooms
- 2,961 Sq Ft
- 0.294 Acres
333 Daisy Lane Jasper, Indiana
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Listing courtesy of Linda Schroering from CENTURY 21 SCHROERING REALTY.
- 3 Bedrooms
- 2 Bathrooms
- 1,650 Sq Ft
- 0 Acres
614 W 34th Street Jasper, Indiana
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Listing courtesy of Daniel Hoffman from HOFFMAN & MULLEN REALTY INC.
- 5 Bedrooms
- 3 Bathrooms
- 2,377 Sq Ft
- 0.346 Acres
1780 Sweet Gum Drive Jasper, Indiana
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Listing courtesy of Amanda Childers from Hawkins & Root Real Estate.
- 3 Bedrooms
- 2 Bathrooms
- 3,232 Sq Ft
- 0.520 Acres
3508 N 600 W Road Jasper, Indiana
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Listing courtesy of Caroline Gobert from ERA FIRST ADVANTAGE REALTY, INC.
- 5 Bedrooms
- 3 Bathrooms
- 2,730 Sq Ft
- 0.680 Acres
580 Riverside Drive Jasper, Indiana
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Listing courtesy of Jud Collett from Key Associates Signature Realty.
- 3 Bedrooms
- 2 Bathrooms
- 1,648 Sq Ft
- 0.340 Acres
4130 N Portersville Road Jasper, Indiana
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Listing courtesy of Gina Mehringer from F.C. TUCKER EMGE.
- 3 Bedrooms
- 3 Bathrooms
- 2,172 Sq Ft
- 0.460 Acres
1244 W 14th Street Jasper, Indiana
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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.
- 4 Bedrooms
- 2 Bathrooms
- 2,168 Sq Ft
- 0.200 Acres
319 E 5th Street Jasper, Indiana
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Listing courtesy of Seth Yates from Key Associates Signature Realty.
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:
3391 N Cedar Gap Lane Birdseye, Indiana
2 Beds 2 Baths 1,000 SqFt 1 Acres
Listing courtesy of Tony Bowes from RE/MAX REVOLUTION.
E CR 1075 S Road Holland, Indiana
4 Baths 39 Acres
Listing courtesy of William Daily from Midwest Land & Lifestyle LLC.
4130 N Portersville Road Jasper, Indiana
3 Beds 2 Baths 1,648 SqFt 0.340 Acres
Listing courtesy of Gina Mehringer from F.C. TUCKER EMGE.