When it comes to choosing a mortgage, one of the biggest decisions you’ll have to make is whether to go with a fixed-rate or adjustable-rate mortgage (ARM). Both have their own set of pros and cons, and it’s important to understand them before making a decision.

Fixed-rate mortgages:

Pros:

• Your interest rate and monthly payments will remain the same for the life of the loan.
• It’s easier to budget for your mortgage payments because they won’t change.
• You can lock in a low interest rate if interest rates are currently low.

Cons:

• If interest rates drop, you’ll still be stuck with the higher interest rate you locked in.
• They tend to have higher interest rates than ARMs initially.

Variable-rate mortgages:

Pros:

• They have lower interest rates initially.
• If interest rates drop, your interest rate and monthly payments will also drop.

Cons:

• Your interest rate and monthly payments can increase if interest rates go up.
• It can be harder to budget for your mortgage payments because they can change.

Ultimately, the decision between a fixed-rate and adjustable-rate mortgage will depend on your personal financial situation and your appetite for risk. Consider your budget, how long you plan on staying in the home, and the current market conditions before making your decision.