I prefer the fixed rate mortgage since the interest rates are set when I take out the loan and will never change. I also prefer the adjustable rate mortgages (ARMs), in cases where the interest rates can be established not to go beyond that of the fixed rates. For ARM, when the interest rates start at a low rate, they tend to increase over time. However, in a case where the interest rates are decreasing, then I would prefer the adjustable rate mortgage ( Fleming, 2014 ). Also, the only case I will consider ARMs is when I plan to stay in my home for a short duration. Consider a case where a five to one-year Adjustable rate mortgage has a fixed rate for five years then that means the interest of the loan will keep adjusting for the remaining period ( Boleat & Coles, 2012 ). Knowing the rates to which the interest increases will enable me to establish whether ARM is suitable over the fixed rate mortgage (Stobbe, 2015). However, the fixed rate is most preferable in my case since I calculate the interest I have to pay given duration and will not be faced by any changes that take place in the rates of interest.
References
Boleat, M. J. & Coles, A. (2012). The Mortgage Market
. New York: Routledge.
Fleming, C. (2014). The loan guide: How to get the best possible mortgage . San Jose, CA: Casey Fleming.
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Stobbe, E. (2015). How to get approved for the best mortgage without sticking a fork in your eye . Jacksonville, FL: Ponto Alto Publishing.
