With a fixed-rate loan, your monthly payment of principal and interest never change for the life of your loan. Your property taxes may go up (we almost said down, too!), and so might your homeowner's insurance premium portion of your monthly payment, but generally with a fixed-rate loan your payment is stable

My 123 Mortgage.com offers fixed rates in all sorts of shapes and sizes: 30-year, 20-year, 15-year, even 10-year. During the early amortization period of a fixed-rate loan, a large percentage of your monthly payment goes toward interest, and a much smaller part toward principal. That gradually reverses itself as the loan ages.  If you have a fixed mortgage right now, think about how much the loan was when you got it,  and where the balance is today.  In five years, you may only have cut the principal by five thousand, but you may be paying $3,000 a month!

You might choose a fixed-rate loan if you want to lock in a low rate. If you have an Adjustable Rate Mortgage (ARM) now, refinancing with a fixed-rate loan can give you more monthly payment stability.

----------BUT HOW LONG DID YOU HAVE YOUR LAST MORTGAGE?-------- Chances are, you refinanced or moved within the last 5 years, according to statistics. This shows that for most people, taking a fixed rate mortgage is not always the best program--especially considering that the rate is usually higher than ARMs. ----read on!----

Adjustable Rate Mortgages -- ARMs, as we called them above -- come in many varieties. Generally, ARMs determine what you must pay based on an index such as the LIBOR or the one-year Treasury Security rate They are usually fixed for a period of time (2, 3, 5 or even 7 years) and then may adjust every six months or year after the fixed period. The most innovative ARMs today are the 1% mortgage and Interest Only Arms.

Traditional ARMs often have their lowest, most attractive rates at the beginning of the loan, and can guarantee that rate for anywhere from a month to ten years. You may hear people talking about or read about what are called "3/1 ARMs" or "5/1 ARMs" or the like. That means that the introductory rate is set for three or five years, and then adjusts according to an index every year thereafter for the life of the loan. Loans like this are often best for people who anticipate moving -- and therefore selling the house to be mortgaged -- within three or five years.

Most ARMs have a "cap" that protects you from your monthly payment going up too much at once. There may be a cap on how much your rate can go up in one adjustment-- say, no more than one percent per year, even if the underlying index goes up by more than two percent. You may have a "payment cap," that instead of capping the interest rate directly caps the amount your monthly payment can go up in one period. In addition, almost all ARM programs have a "lifetime cap" -- your interest rate can never exceed that cap amount, no matter what.

You might choose an ARM to take advantage of a lower introductory rate and count on either moving, refinancing again or simply absorbing the higher rate after the introductory rate goes up. With ARMs, you do risk your rate going up, but you also take advantage when rates go down by pocketing more money each month that would otherwise have gone toward your mortgage payment.  With an interest-only Arm, you save even more per month, especially during the initial fixed period.

Email: Arms@my123mortgage.com

or Fixedrate@my123mortgage.com

and apply now for a free pre-qualification and consultation.