Okay, let’s review the choices!

First, what is a “Fixed rate mortgage loan”?

These are loans where the interest rate is a non-changing rate, so the interest and principal payment portion of the loan will always stay the same throughout the life of the loan.   This type of loan is the best type in my option, because of the predictability of the monthly payments.

Now for the ARM (Adjustable Rate Mortgage) loan (provided by BankRate):

When you get an ARM, two main factors determine the rate you pay: the index and the margin. The index is a rate set by market forces and published by a neutral third party. The margin is an agreed-upon number of percentage points that is added to the index to determine your rate.

So, like everything in life, which mortgage to choose depends on the current financial environment.

The concerning problem with ARMs, is that the home buyer can afford a larger loan when the rates are low, but when the rate rise, the homeowner might find that it’s harder to afford the loan now that the interest rate and total payment has increased!

With both types of mortgages, over time the cost will go up.  But this is because of the property tax (where this is applicable) and house insurance increases.

Before taking out the load, I saved up 20% of the house price and made a down-payment on it so I wouldn’t have to pay PMI (Private Mortgage Insurance), both fixed and variable mortgage loans typically have the 20% down requirement.

So, which did I pick…  the fixed mortgage loan of course.  Would I do the same today?  You betcha!

We all seen how an ARM can go bad with this past year!  I believe that the fed are going to start raising rates gain (then will have to eventually to curtain inflation).  And when that happens, I don’t think an ARM would be the best vehicle to use for buying a house.

For a list of the current mortgage rates, click here.  I’m actually a big fan of the bankrate site.  They provide more that just rates, some of their calculators are great, and they also have some good information on a broad range of financial topics.

The ARM loans are actually pretty complete, with product varying quite a bit, not to mention the hybrid loans.

Another mortgage loan that I will never get, is an “Interest Only” loan.  I don’t see the merit in that type of loan at all.  Way too risky for me.

So, here is where I ask any viewer that has or had an ARM… what do you think of it?  and would you do it again?