It’s the age-old question for home buyers in need of a mortgage:
Which is better: Fixed or ARM?
Historically, the answer has hinged on a homebuyer’s desire to meet one of two mutually-exclusive mortgage financing goals:
Get low mortgage payments for better cash flow
Get long-term payment stability for better budget planning
But because of government intervention and lingering questions about the economy, fixed-rate mortgages are now pricing cheaper than their adjustable-rate counterparts.
Based on today’s mortgage market, therefore, home buyers can get both.
Versus a comparable 5-year ARM, conforming fixed-mortgage rates are priced roughly 0.250 percent lower and have been over the past 23 days. The quarter-percent difference equates to $33 saved per month on a $200,000 home loan.
Mortgage markets are ever-changing so rates we can’t know if this pricing anomaly will last. But, while it does, the decision to choose Fixed over ARM is a lot simpler.