One of the most critical decisions mortgage shoppers must make is the type of mortgage that best meets their needs. The importance of the decision has been heightened by a post-crisis market in which price differences between all categories of mortgages are unusually large.
The decision process can be divided into three parts: The first is whether to select an adjustable-rate mortgage (ARM) or a fixed-rate mortgage (FRM). All ARMs today are 30 years, and in this article we compare them to a 30-year FRM.
The second part of the decision process, for those who elect the FRM over the ARMs, is to select the term of the FRM.