Comparing Fixed Rate and Adjustable Rate Mortgage Options

Applying for a mortgage is an essential step to take when purchasing a new home—but with so many options available, choosing the right mortgage terms to fit your needs can be a difficult task. Before you start the application process, educate yourself on fixed rate and adjustable rate mortgage loan options:

Fixed Rate Mortgage

A fixed rate mortgage allows for the repayment of debt utilizing equal monthly payments over a specified period of time. Most fixed rate mortgages are broken down into 15 or 30 year terms in which the interest rate never changes. Fixed rate mortgages offer home buyers a number of benefits: For example, because the interest rate is fixed, homeowners are not affected if the overall market interest rates increase. In addition, a borrower can choose to make larger monthly payments and direct the additional portion of the payment toward the principal, ultimately decreasing the principal balance at a faster rate.

Adjustable Rate Mortgage

An adjustable rate mortgage (ARM) is one in which the interest rate is periodically adjusted based on the changes of a specific index, including the one-year Treasury Bill. This means that a homeowner’s monthly payments may increase or decrease with little notice. Lenders tend to charge lower initial interest rates for adjustable rate mortgages, which may make them less expensive over time if the rates do not change. This feature also makes an ARM ideal for potential buyers who only plan on living in a house for a few years.

The easy way to determine which mortgage loan is right for you is to consult with your Bellevue-area mortgage company. For more information on mortgage loans, refinancing, or consolidating debt, call Ryan Bukoskey at (425) 770-0725 or email at