KNOWLEDGE CENTER

Many mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed-rate mortgage, the interest rate never changes and your payments remain stable throughout the life of your loan until your house is paid off. With an adjustable-rate mortgage (ARM), the interest rate changes at regular intervals — usually once every year — based on a formula that uses a market index. For most ARM options, rate adjustments begin after an initial period — usually between two and ten years — during which the rate is fixed.

A fixed rate is usually best if you plan to stay in your home for the long term and are buying at a time when rates are relatively low. An ARM is usually best if you plan to move before the rate adjustments begin, or if you are buying when rates are relatively high.

For help deciding which option is best for you, contact your local mortgage professional Tony Webb at 954-475-8787 or acwebb1@bellsouth.net for a free consultation to decide whether or not a fixed-rate mortgage or an ARM is best for you.

If you are considering an adjustable rate mortgage, then when you make sure that your pre-payment penalty does not exceed the fixed period of your loan. Example: If you plan on only living in the house for 2-3 more years and you select a 3/1 ARM, you probably do not want to have a pre-payment penalty that lasts for 5 years.