What does it mean when the lender asks if you want an adjustable rate or fixed rate mortgage?
Getting a home loan can be cumbersome. Finding the rate loan can be confusing to first time buyers as well as for seasoned buyers. We want to help make getting and understanding home loans in Maine a little easier.
Fixed and adjustable rate mortgages generally operate as their respective names imply but let's break it down a little more.
Fixed Rate Loans
A fixed rate loans stays at the same interest rate and monthly payment for the entire life of the loan. This allows you to have a consistent monthly payment that you can budget and plan for. Most of the first time home buyer programs offer a fixed rate loan. Generally speaking we find most buyers purchase their homes with fixed rate home loans.
Adjustable Rate Loans
The adjustable rate (ARM) home loan may start off with a lower payment, but the interest rate can increase after a predetermined period of time and/or can adjusted based upon on market conditions. The terms for the rate changes (adjustments) are typically predetermined within the loan conditions. There are many good reasons to choose an ARM loan including initially smaller monthly payments or lower initial interest rates that appeal to people who plan to refinance their loans in the near future.
Finding your loan
The best place to start is having a honest conversation with a qualified loan officer who can assist you with choosing the right home loan for your goals and financial situation. If you're ready to explore home loans in Midcoast Maine and to get prequalified, please contact us. We'll help match you to a local lender that will fit your needs and personality.