...mortgage and a fixed mortgage? Benefits and pitfalls?

An adjustable rate mortgage is just that--it will adjust monthly or so, depending on your loan agreement. On a fixed rate mortgage, the interest rate stays the same and the principal and interest payment will be more consistant.There are mortgages where you can get the loan fixed for two, three or five years and then it is an adjustable rate after that. Most people will refinance again to keep the lower rate.The benefits and pitfalls depend on your special situation. I always ask my clients for thier goals before deciding which product to put match them up with.If you'd like to call and talk about your goals and which might be better for you, please feel free to call 877-659-5626. I'll let Laura know about this and she'll be able to help you.

What is a Fixed-Rate Mortgage?

As its name implies, the interest rate for a fixed-rate mortgage remains fixed (or constant) for the term (or duration) of the loan.

advantages: You know what you are getting. If the rate is eight percent today, it will be eight percent next year and every year after until the loan is paid. You'll always be able to easily budget your monthly payment since that amount will never fluctuate.

disadvantages: Lenders sometime charge rates that are higher than the current rate. Also, there are often penalties for prepaying the loan, which is what happens if you should ever decide to refinance your loan (to either get a lower fixed-rate loan or to switch to an adjustable-rate mortgage).What is an Adjustable-Rate Mortgage?

Also known as a variable-rate loan, the interest rate for an adjustable-rate mortgage (or an ARM loan) can?and will?fluctuate during the term of the loan.

advantages: This is best understood in comparison to a fixed-rate loan. Ironically, the volatility of the interest rate is what can make it either an advantage or a disadvantage.
For example, if the current rate is high (relative to what you could have got with a lower fixed-rate), your monthly mortgage payment will be higher; the opposite holds true as well. One clear advantage is that ARM mortgages typically do not have prepayment penalties. This is quite beneficial if you should ever decide to refinance your mortgage.
disadvantages: Again, the unpredictability of rates can either be an advantage or disadvantage, depending entirely on what you are paying versus what you could have been paying if you had a fixed-rate mortgage.

However, the most critical disadvantage affects borrowers that don't completely understand the terms of their loan?especially those that have "teaser" rates (very low, introductory fixed rates that increase once the period expires).