October 30, 2009, Newsletter Issue #191: Fixed Rate vs. Adjustable Rate

Tip of the Week

If you live in the northeast, you probably favor Fixed Rate mortgages. Should you live on the “left coast”, you may be more inclined to look for an Adjustable Rate Mortgage (ARM). If your address is in the Midwest, you are probably open to compare either, without prejudice toward one or the other. There is no one right answer.



For those who value “security” above all else, a fixed rate mortgage is the perfect answer since the rate will not change for the life of the loan, normally 30 years. If you want to save as much money as possible and are not afraid of a little risk, an ARM may be the best answer. Should you plan to own the home securing the mortgage for a relatively short time (three to eight years), an ARM probably is the best choice. However, should you plan on keeping the property (or at least the mortgage) for the long term, a fixed rate might be better (and safer) for you.


If you need to qualify for a higher mortgage than you can get with a fixed rate, you may need to use an ARM to be approved for a larger amount. In any case, always compare the Annual Percentage Rates (APR’s) of all of your choices to know which selection is the best option for you .

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