Find the right mortgage for you
Fixed Rate Mortgages
- Your interest rate and payments won't change giving you peace of mind
- Payment stability makes budgeting your finances easier
- Great if you plan to stay in your home for a longer period
Adjustable Rate Mortgages
- Lower interest rate and payments for the first few years of your mortgage
- Take advantage of falling interest rates without having to refinance
- Great if you plan to move or pay off your mortgage within the first 10 years
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Which Mortgage is the Better Option for You?
Adjustable-Rate Mortgages
| Advantages | Disadvantages |
| Features lower interest rates and payments early on in the loan term. Because lenders can use the lower payment when qualifying borrowers, people can buy larger homes than they otherwise could buy. | Rates and payments can rise over the life of the loan. |
| Allows borrowers to take advantage of falling rates without refinancing. Instead of having to pay a whole new set of closing costs and fees, ARM borrowers just sit back and watch the rates, and their monthly payments, fall. | Borrowers need to be mindful on how quickly the rates and payment can adjust on their mortgage. One way to protect rates and payments rising too quickly is to ensure you understand the maximum annual rate caps and lifetime caps for the ARM. |
| Helps borrowers save and invest more money. Someone who has a payment that’s $100 less with an ARM, can save that money and earn more in a higher-yielding investment. | Some lenders offer ARMs called negative amortization loans. Borrowers can end up owing more money than they did at closing. That’s because the payments on these loans are set so low — to make the loans even more affordable — that they cover only part of the interest due. The remainder gets rolled into the principal balance. Borrowers are advised to avoid these types of ARMs whenever possible. |
| Offers a less expensive option for borrowers who don’t plan on living in one place for very long (less than 5 to 10 years). |
Fixed-Rate Mortgages
| Advantages | Disadvantages |
| Rates and payments remain constant. There will be no surprises, even if inflation surges out of control and mortgage rates head to 18 percent. | To take advantage of falling rates, fixed-rate mortgage holders have to refinance. That means a few thousand dollars in closing costs and time spent to refinance |
| Stability makes budgeting easier. Borrowers can manage their money with more certainty because their housing payments don’t change. | Can be too expensive for some borrowers — especially in high-rate environments — because there is no early-on payment and rate break. |
| Simple to understand, so they’re good for first-time buyers who would be challenged to understand a 7/1 ARM with 2/6 caps. | Are virtually identical from lender to lender. While lenders keep many ARMs on their books, most financial institutions sell their fixed-rate mortgages on the secondary market. As a result, ARMs can be customized for individual borrowers, while most fixed-rate mortgages can not. |
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WHY YOU SHOULD BE WITH A CREDIT UNION VS. A BANK
Better Rates
As not-for-profit institutions, credit unions are generally able to offer lower loan rates and higher deposit rates than the banks.
Valuable FREE Services
LA Financial Credit Union provides members with no-surcharge access to over 1,800 CO-OP Shared Branch Network locations and over 30,000 surcharge free CO-OP ATMs.
Membership Ownership
Owned by their members (rather than outside stockholders), credit unions are focused on people – not profits. Members elect a volunteer board to oversee their credit union; the credit union’s resources are then directed toward the good of the membership as a whole. Credit Unions exist to serve their member-owners by helping them to make the most of their money.
