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Primary Residential Mortgage, Inc.
10121 N Rodney Parham, Suites C & D
Little Rock, AR 72227
855-474-7169
501-225-5626
NMLS # 3094
Branch NMLS # 252910
Licensed by Arkansas Securities Department 11558
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Equal Opprtunity Lender

Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

An In-Depth Comparison: ARM v. Fixed- Rate Mortgage

Both ARMs or the adjustable- rate mortgage and the fixed- rate mortgage are considered to be two of the primary mortgage types available today. However, although several mortgage companies do offer different varieties within these two distinct categories, the very first step that you have to do when shopping for a home loan is to know which of these two home loan types would best suit your needs.

Fixed- Rate Mortgages

A fixed- rate home loan charges a set of interest rate that doesn't change throughout the course of the loan. However, the amount of the interest and the principal that is paid every month may change with each payment; the total payment stays the same, which makes it easier for the borrower to manage their finances.

A partial amortization schedule is used to show which the interest and principal payments change over the course of the home loan's term.  Looking at the partial amortization schedule can help you understand how to budget your finances.

The best thing about a fixed- rate loan is that the borrower is secured from potential and sudden increases in monthly home loan payments if the mortgage interest rate increases. Fixed rate mortgages are quite easy to understand and only vary a little from one lender to another.

The total amount of mortgage interest that a borrower will pay would still depend on the mortgage actual term even though the interest rate is fixed. The lease term may vary from 15,20,30,40 and even 50 years.

The most popular mortgage term that most borrowers choose is the 30- year lease because it offers the most affordable monthly payment. However, the trade-off also has a higher overall cost. The monthly home loan payments for shorter terms are significantly higher but allows you to repay the loan's principal balance much quicker. Shorter- term home loans also offer a much lower interest rate, which means that a significant amount of the payment goes toward the principal balance.

Adjustable- Rate Mortgage

The adjustable- rate mortgage interest rate changes over time. The first few years on an ARM is much more affordable than payments made on a fixed- rate mortgage. However, If you've had the ARM for an extended time period, then its interest rate will change and perhaps surpass the fixed-rate loan's interest rates.

ARMs have a certain period of time when the initial home loan interest rates stay the same, afterwards rates adjust at a certain pre-arranged frequency. The amount of time where interest rates stay low depends on the length of the mortgage maturity.

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