This informative article from U.S. News highlights 10 terms that homebuyers should know – especially first-time homebuyers who are new to the process.
For example, if you have a “fixed-rate mortgage,” your monthly mortgage payment won’t change much over the years. An “adjustable-rate mortgage,” also known as an ARM, is essentially the opposite of a fixed-rate mortgage. You’ll have a fixed rate for several years, maybe five or 10, and then the interest rate adjusts according to the fully indexed interest rate, often the prime rate, which is what banks charge their most creditworthy customers. So while your interest rate and payments will likely be lower in the beginning than those of the homeowner with the fixed-rate mortgage, hope that interest rates remain low throughout the life of your loan. As interest rates climb, so too will your own interest rate and monthly payments.
