How do I choose between a fixed rate and adjustable rate loan?
Personal preference and your financial needs will help you select a fixed rate or adjustable rate mortgage. Fixed rate loans give you consistent monthly payments for a specified term and are especially attractive when mortgage rates are low. Adjustable rate loans fluctuate with the interest rate market, dipping lower when rates are down and rising as rates increase. Your payments under an adjustable rate loan may vary monthly or may be consistent with an adjustment payment at a specified point or points in time (a balloon). Adjustable rate loans may be more attractive when a homeowner intends to stay in a house for only a few years or when a homeowner has other investments to offset the interest rate risk.
