The two main categories of home loans are fixed-rate loans and adjustable-rate mortgages or ARMs. Knowing the differences between the two, and being able to determine which loan is right for your situation, can be what divides a great home-buying experience from a lousy one. Fortunately, navigating the ins and outs of ARMs and fixed-rate loans in Kansas City isn’t too hard with a little help from your favorite quick-closing mortgage lender.
Fixed-rate loans are the most popular and most common type of loans on the market, comprising roughly 75% of all home mortgages. One of the reasons for their popularity is that fixed-rate loans have their interest rate “locked in” at the time of your home purchase, meaning that it stays the same for the life of your loan. This has a number of benefits, including shielding you from fluctuating interest rates that can lead to increases in your monthly mortgage payment.
Because your interest rate is always the same with a fixed-rate loan, your monthly mortgage payment also stays the same, though what percentage of that payment is principal and what part is interest will change throughout the life of the loan. This makes it easy to budget, since you’ll always know what your house payment is going to be before the bill comes due.
Adjustable-rate loans, on the other hand, have interest rates that are fixed for a certain period of time, after which they fluctuate with the market. ARMs are considered more “complicated” than fixed-rate loans, and they can require a little more patience on the part of your lender to understand, but they do carry a variety of potential benefits, including lower initial payments and the ability to take out larger loans. Because ARMs adjust based on industry benchmarks, they can also offer you an opportunity to enjoy lower interest rates without the need to refinance in the event that interest rates go down after you purchase your home.
In the end, there is no “one size fits all” solution to home mortgages. If there were, then everyone would just get that one and buying a house would be a lot simpler! As it is, the mortgage that’s right for you will depend on a variety of personal factors, including your budget, how long you plan to own your home, and the current state of the interest market.
If you’re more concerned about lower payments in the short term than you are about stability in the long term, or if you’re planning to move before the fixed period would expire, or the interest rate market is headed for a downturn, then an adjustable-rate mortgage may be just what you need. On the other hand, if you can’t afford a larger payment in the event of an interest rate increase, or if you need to be able to budget reliably what your mortgage payment is going to be every month, then you may want to look at fixed-rate loans in Kansas City.
Fortunately, it’s not a decision you have to make on your own when you have a reliable quick-closing lender in Kansas City working on your side. First Fidelis can help you determine which type of loan is right for you, and help you close quickly on adjustable-rate loans or fixed-rate loans in Kansas City so that you can move into the house of your dreams while also enjoying the peace of mind that comes with knowing you’ve made the right choice. So if you’re ready to buy your next home or just want to learn more about the differences between ARMs and fixed-rate loans, contact First Fidelis today!