There are two main types of interest rates for mortgage loans; fixed and adjustable. Find out which type of interest rate is right for you!
There are two main types of interest rates for mortgage loans; fixed and adjustable. Depending on your situation and what you are looking for will determine which interest rate will be right for you. One is not necessary better than the other, it depends on a lot of factors such as the current interest rate, what each option for interest rates have to offer, and your current situation (such as when you are planning on moving again).
Fixed interest rates stay the same during the course of the entire length of the term. The advantage of a fixed interest rate is that you know exactly what to expect and therefore will not get any unpleasant surprises, such as your monthly payments all of a sudden increasing dramatically. The disadvantage of a fixed interest rate is that lots of times, fixed interest rates do not offer as low of an interest rate as what you can initially get with an adjustable interest rate.
Adjustable interest rates adjust over the length of the term. The disadvantage of an adjustable interest rate is that you cannot predict how it will adjust, and by how much. You cannot even predict how an adjustable interest rate will adjust according to predictions of how interest rates in the housing market will rise or fall since adjustable interest rates do not always adjust along with the housing market. The advantage, however, of an adjustable interest rate is that lots of times you can get a much lower interest rate initially with an adjustable interest rate, and a lot of times you can lock that into a long time period of being fixed (not changing) for several years. This is especially beneficial if you plan on moving after a few years.
It is important to note, however, that no matter which type of mortgage loan you get, whether it be fixed or adjustable in some way, you can always refinance if you want to change it. However, refinancing is expensive so it is important to make the wisest decisions you can concerning which type of interest rate to get.
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