Fixed vs. Adjustable: Which is the Better Loan Option?
If you're in the process of purchasing a home at the Lake of the Ozarks , you've probably started looking into your mortgage options . One question that buyers have to consider is 'which is the better loan option: fixed or adjustable?' That's a very good question to ask, and the answer will vary depending on your specific financial situation and long-term goals. So, to help you to determine which is best for YOU, let's take a look at the differences. Adjustable Rate Mortgages Adjustable Rate Mortgages (ARM) come in many varieties. Generally, the interest rates for ARMs are determined by a federal index. A few of these are: the 6-month CD rate, the 1 year Treasury Security rate, the Federal Home Loan Bank's 11th District Cost of Funds Index (COFI), or others. Most ARM programs feature a "cap" that protects you from sudden increases in monthly payments. Your ARM may feature a cap on interest rate increases over the course of a year. For exam...