Fixed Rate Mortgages are designed for long-term ownership and for homeowners who want to eliminate all risk of future interest rate adjustments. ARM mortgages are for homebuyers who want to lower their payments for a specified period of time. Balloon rate mortgages typically have a shorter term with lower initial payments, but require a larger lump sum payment at the end of the term. The difference between a Fixed Rate and ARM is based upon your plan to live in the property, the interest rate risk you are willing to take, and the mortgage payment that you are comfortable paying each month.
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