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WHAT IS THE DIFFERENCE BETWEEN A FIXED AND ADJUSTABLE RATE LOAN?

April 26, 2017Adjustable difference fixed loan rate

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WHAT IS THE DIFFERENCE BETWEEN A FIXED AND ADJUSTABLE RATE LOAN?

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Fixed rate loans have a set interest rate and payments that do not change over the life of the loan. Adjustable rate loans are linked to an index and fluctuate as the index rate changes. Since there is more risk involved with adjustable loans, lenders often reward borrowers with initial discounted interest rates that are lower than fixed rate loans. Adjustable loans are normally recommended for borrowers who do not plan on keeping the loan for the full term, or for borrowers who want to benefit from lower payments during the initial term of the loan.