Mortgages: Should you go for a fixed rate or adjustable rate?
Why Should I Switch to a Fixed Rate Mortgage? Or Adjustable?
Generally, mortgages can be categorized as fixed rate and adjustable rate. As their name implies, fixed rate mortgages will mean you have a fixed interest rate and steady monthly payments. An adjustable rate mortgage means your monthly payments could change if interest rates change.
Both types of mortgages have their advantages. For example, when interest rates are low or if you think rates will go up in the future, it makes more sense to switch to fixed rate mortgage from an adjustable rate mortgage. This makes the most sense if you know you are going to stay in your home a while.
On the other hand, if you see yourself selling your home in a few years or are looking to pay off your loan quickly with the lowest rate possible, consider moving to an adjustable rate mortgage from a fixed rate mortgage. If you can afford it, pay more than the required payment; the extra money will pay down your principal balance.
To find out which solution is best for you, contact a Mortgage Loan Officer in your area. They can help you calculate the costs and savings to determine which type of mortgage is best for you and your family.