The fixed-rate mortgage is the most popular loan option in Texas and Missouri with predictable payments that remain the same for the life of the loan. With a fixed-rate loan, your interest rate will never change for the term of your mortgage. The shorter your loan term, the lower the interest rate tends to be. While fixed-rate mortgages can have very competitive interest rates, keep in mind they won’t be the lowest advertised.
Adjustable-rate mortgages usually have interest rates that are lower initially than a fixed-rate mortgage although they are subject to adjustment. The benchmark mortgage in the U.S. is the 30-year fixed-rate mortgage but you can also choose a 10-year, 15-year, or 20-year mortgage. With a 15-year fixed-rate loan, your interest rate will likely be lower, and you will build equity faster, but you will have higher monthly payments compared to a 30-year loan.
If you want a budget-friendly and stable monthly mortgage payment, a fixed-rate home loan may be a good fit. The only real drawback with this loan option is you can get a lower initial interest rate with an ARM. If you only plan to be in your home for 5 years or less, an ARM may offer substantial savings.