When you’re buying a condo or loft in DTLA, you’ll have a few choices on what type of mortgage loan you get. For some people, fixed-rate is the best choice; for others, adjustable-rate is best.
But what are the differences? Here’s what you need to know.
What is a Fixed-Rate Mortgage?
In a fixed-rate mortgage, your interest rate stays the same over the life of your loan. That’s true whether you borrow for 5 years, 10 years, 15 years or 30 years. No matter what, your monthly payment will stay the same until you’ve made your very last payment. (Then you’re free!)
What is an Adjustable-Rate Mortgage?
With an adjustable-rate mortgage, or ARM, the interest rate your lender charges you on the outstanding amount can vary. It usually changes once a year based on what the current market is doing. Most ARMs have a fixed payment for a certain period, like 5, 7 or 10 years; after that, the interest rate begins to fluctuate.
What’s Right for You?
The type of loan you choose – fixed-rate or adjustable-rate – is a personal decision. For some homeowners who want lower initial payments, sometimes ARMs are the best choice. For people who want solid stability and predictability, fixed-rate is more likely a better choice.
Talk to your lender about all your options before you make a decision, and ask family and friends, too. People who have each type of mortgage loans will be able to share their own experiences so you’ll know what to expect.
Are You Buying a Loft or Condo in DTLA?
Call us at 213-254-7626 or get in touch with us online to start exploring your options when you want to buy a loft or condo in downtown Los Angeles.
While you’re here, check out our: