MoneyBusiness

Financial Intelligence Is The Road
To Financial Success.

Money & Finance

Categories

> Competitions
> Confront Your Debt
> Debt Consolidation
> Debt Help
> Financial Jargon
> Finance Tid Bits
> Investing
> Managing Your Debt
> Personal Finance

Blogs I Read

> Blogflux
> Christian Finance
> Growing Money
> PFBlog
> Money Blog
> Moolanomy

Sponsored Link


Debt Consolidation

Mortgage Loan Types: FRM

30th Spetember 2007

Fixed Rate Mortgage (FRM) is the exact opposite of the ARM or Adjustable Rate Mortgage. With a fixed rate mortgage the interest rate on the loan remains the same throughout the life or term of the mortgage. So if you take a 30 year mortgage the rate will remain the same for the 30 year period or until you decide to refinance.

Financial Intelligence I always think that for sound financial stability and for long term planning this is a good option to chose especially if you have a good comfortable job and want to budget for long term because the repayments are fixed since the interest rate is also fixed. The major difference between a FRM and an ARM is that with ARM or adjustable rate mortgage the repayment is that if the rates go up then the interest rate and repayment on your mortgage will also go up. ARMs become advantageous over FRMs when interest rates drop because then the repayments become lower and if you are on a fixed interest rate then your repayments remain higher. However, there's a flip side in that if interest rates drop and your fixed rate is higher you could be reducing your mortgage faster because you are paying more. I personally used this option to ease my financial situation and at the time the interest rate was high so fixing my mortgage rate and repayment did me good.

Overall fixed rate mortgage loans are better for long term financial stability because there is little risk involved for the borrower in comparison to other loans like home equity loans or adjustable rate mortgages. Nevertheless, you should first speak to a financial planner or consultant and get the full understanding of your financial situation and individual requirements.

"The world is his who has money to go over it."
- Ralph Waldo Emerson

Comments (8):

Pete Says: I have an FRM and so far I think it's been the best option for me | 09.30.2007 |

Olga Says: FRM seems to work better for me as well as I used to have an ARM | 09.30.2007 |

Sean Says: I just read the article and it looks like there is really little risk with fixed rates | 09.30.2007 |

Jasmine Says: I took a home equity loan to pay off my debts although I am managing I am seeing now that perhaps I should have negotiated to pay off my debts with my creditors instead as it has turned out to be more costly so don't be pressured by bad debts rather use reason | 09.30.2007 |

Keith Says: Thanks for the info. I'm learning quite a bit about the different mortgage types | 09.30.2007 |

Quinton Says: Which options have you tried out Kevin? | 09.30.2007 |

Kevin Says: I obtained my initial mortgage on an ARM and then I switched to FRM for a 12 month period of which after that automatically I went back to ARM. I had applied for a home equity to pay off my debts however the institution I have my mortgage turned me down. Ofcourse at the time I was mad and wanted to take my business elsewhere however after assessing the full financial picture I realized they did me a favor | 09.30.2007 |

Lameck Says: You specified that you used FRM to ease your financial situation and it helped. I am thinking of doing the same to save some cash | 09.30.2007 |

 

Add Comments Here:

Name:

Email: (your email will not be shared or published)

Website:

Comment:

^ Top | Copyright © MoneyBusiness | Disclaimer | Contact Me