Article: Which Is Better? Fixed-Rate Or Adjustable-Rate Mortgages
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Which Is Better? Fixed-Rate Or Adjustable-Rate Mortgages
The answer depends on several factors including your financial situation. Lets take a look at the main differences between the two types of mortgages.
Fixed Rate Mortgage
Two major components that are needed to compare fixed rate mortgages are the interest rate and the points. Points are fees paid to the lender at the beginning of the mortgage period. They are based on a percentage of the loan. So, one point equals one percent of the loan amount. Therefore, a $100,000 mortgage with 1.5 points would cost $1,500.
One lender may offer a lower interest rate than another but the points may be higher resulting in a less attractive loan. The important consideration here is the length of time you plan to hold the mortgage. The longer you plan to keep th...
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