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Basics
Fixed vs adjustable rate
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Basics
Fixed vs adjustable rate
A fixed rate never changes for the life of the loan. An adjustable rate (ARM) is fixed for an opening period, then resets on a schedule to an index plus a margin, within caps. ARMs usually start lower; a fixed rate buys certainty.
Planning to sell or refinance within 5 years? A 5/6 ARM can cost less than paying for 30 years of certainty.
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