subject: Mortgage Loan: Fixed Versus Adjustable [print this page] Mortgage Loan: Fixed Versus Adjustable Mortgage Loan: Fixed Versus Adjustable
A mortgage loan is a type of loan that has to do with real estate. A mortgage loan covers the cost of a property and everything on that property, like a house for example. There are two main types of mortgage loans; fixed and adjustable. A fixed mortgage and an adjustable mortgage are the two different types of interest rates. So, how do you decide which one is best for you?
A fixed interest rate stays the same throughout the term of the loan. Therefore, if you can get a low interest rate from the start, you may want to consider getting a fixed interest rate because you will not run the risk of having the rate increase. If the interest rate ever drops a lot lower than what you started out with, you can always refinance to try and get the lower interest rate.
An adjustable interest rate can change at any time for any length of time. It is therefore much more risky than a fixed interest rate. Many times, however, a mortgage loan will offer a fixed adjustable interest rate to start out with. A fixed adjustable interest rate will stay the same (or be fixed) for the first few years or so, and then it can change up or down for the duration of the term. Lots of times, however, mortgage loans have caps on adjustable interest rates so that it will never be higher than a certain interest rate. If you are able to have a fixed adjustable interest rate that is really low for the first few years (the longer the better), and then have the cap not be high, this option may be worth looking into. If not, going with a fixed interest rate will be your safest bet for saving the most on interest.
