What are the advantages and disadvantages of adjustable-rate versus fixed-rate mortgages? Identify the conditions that should exist to make adjustable and fixed-rate mortgages favorable to lenders and borrowers at the same time. Which would you suggest for a home buyer at this time?© BrainMass Inc. brainmass.com October 9, 2019, 9:49 pm ad1c9bdddf
The advantages of an adjustable-rate mortgage (ARM) is that generally one can get a lower interest rate than a fixed-rate mortgage (FRM) at current interest rates. This will save money in the short-term. The disadvantage is that the rates can change in the future and even surpass an FRM. There are many types of ARM, but I will assume we are talking about the vanilla ARM's (no-prepayment penalty, easily ...
Adjustable-rate versus fixed-rate mortgages