Since 1984, Home Financing Center has been dedicated to helping members of the Coral Gables and Miami communities achieve their dreams of homeownership. With a wide range of mortgage programs available, including fixed and adjustable rate loans, we strive to find the perfect fit for every individual's unique needs. Let’s look into the differences between fixed and adjustable rate loans to help you better understand each option.
Understanding Fixed and Adjustable Rate Loans
Understanding Fixed and Adjustable Rate Loans
What Are Fixed Rate Loans?
As the name suggests, the interest rate on fixed loans remains the same for the entire duration of the loan. This means that your monthly mortgage payments will also remain the same throughout the loan term, providing stability and predictability in your budgeting.
Pros of Fixed Rate Loans
Fixed rate loans are available in various terms, such as 10, 15, 20, and 30 years, allowing borrowers to choose a term that best fits their financial goals. These loans are a good option for those who plan on staying in their home for a long period of time, as they can lock in a low interest rate for the life of the loan.
What Are Adjustable Rate Loans?
Adjustable rate loans, also known as variable rate loans, have interest rates that can fluctuate over time. These loans typically offer a lower initial interest rate compared to fixed rate loans, making them attractive to borrowers. However, after a designated period, the interest rate can change and potentially increase, causing your monthly payments to also increase.
Pros of Adjustable Rate Loans
The main advantage of an adjustable rate loan is the lower initial interest rate, which can save you money in the short term. This can be a good option for those who plan on selling their home or refinancing before the interest rate adjusts.
Need guidance for finding the best loan options for your financial situation? Contact our team at Home Financing Center in Florida today!