One of the most difficult decisions that many potential homebuyers experience is whether to choose a fixed loan or an adjustable loan. We understand that each client and situation is very different and we do our very best to help you consider all options. At First Ohio Home Finance, Inc. we will walk you through both options, helping you to consider which would be right for you and your family. To help you understand the difference between a fixed rate and adjustable rate mortgage we have created a comparison. This will help you get a head start on deciding between the two.

Fixed-Rate Loan

  • Locks in your best interest rate for the term of the loan
  • Your monthly payment remains the same even if your principal and interest rates change; it’s important to note that property taxes and homeowner’s insurance premiums can change as they are independent of your loan.
  • Initial loan payments are applied toward your interest—and less to principal—although that reverses over time.
  • If you plan to stay in your home for 10 years or more, a fixed-rate loan might be a good option.

Adjustable Rate Mortgage (ARM)

  • Offers lower rates at the beginning of the loan
  • Offers a low introductory rate for a period of time before the rate unlocks and adjusts periodically according to an outside index.
  • While various types of ARMs are available, they adjust either annually or semi-annually; most of these loans come with caps that prevent your monthly payment from increasing significantly.
  • If you plan to move in three to five years, an ARM might be a good option for you.

We take it one step further and go beyond just looking at the rates, First Ohio Home Finance, Inc. will also help you consider other factors like current market conditions, personal goals and risk tolerance.