Buying a home in Schertz, Texas is an exciting milestone, but it also comes with important financial decisions. One of the biggest choices homebuyers face is whether to choose a fixed-rate mortgage (FRM) or an adjustable-rate mortgage (ARM). Understanding the
differences between these loan types can help you determine which is best for your budget and long-term plans.
A fixed-rate mortgage in Schertzoffers a stable interest rate that remains the same for the entire loan term, typically 15, 20, or 30 years. This predictability makes it a popular option for homebuyers in Schertz who want consistent monthly payments and long-term financial stability.
● Predictable payments: Your interest rate and monthly principal and interest payments never change.
● Protection from rate increases: If market interest rates rise, your mortgage remains unaffected.
● Long-term stability: Best for buyers planning to stay in their home for many years.
● Higher initial rates: Fixed-rate mortgages usually start with a higher interest rate compared to an ARM.
● Less flexibility: If interest rates drop, you would need to refinance to benefit from lower rates.
An adjustable-rate mortgage (ARM)starts with a lower fixed interest rate for a set period—often five, seven, or ten years—before adjusting annually based on market conditions.
● Lower initial interest rates: Typically lower than fixed-rate loans, leading to smaller payments at first.
● Potential cost savings: If you plan to sell or refinance before the adjustable period starts, you may save money compared to a fixed-rate mortgage.
● Possible rate decreases: If market rates drop, your interest rate and payments could decrease after the fixed period.
● Unpredictable payments: Once the fixed period ends, interest rates can fluctuate, leading to higher payments.
● Potential for significant rate increases: If rates rise, monthly mortgage payments can become unaffordable.
The right mortgage depends on your financial situation and how long you plan to stay in your home. If you are purchasing a forever home in Schertz and prefer stability, a fixed-rate mortgage is likely the best option.
However, if you anticipate selling or refinancing within a few years, an ARM could help you save on interest costs during the initial fixed period.
Choosing between a fixed-rate and adjustable-rate mortgage is a significant decision, and it’s important to explore your options with a trusted mortgage professional. At New Horizons Lending, we help Schertz homebuyers find the best financing solutions for their needs.
Contact us today to discuss your mortgage options and secure the right loan for your home in Schertz, Texas.