Current Mortgage Rates

Fixed vs Adjustable Rate

Determining which mortgage term is right for you can be a challenge.

In a fixed-rate mortgage, the interest rate and your monthly payment remain unchanged for the life of the loan (until you pay off the mortgage, refinance or sell your home, whichever comes first).

By contrast, the interest rate of an adjustable-rate mortgage (ARM) changes – which means your payment can change too. If interest rates rise, your payments could go up. If rates fall, your payments could go down. Because you, the borrower, are assuming more risk (via changing payments), lenders are willing to charge you less interest.

If you have an adjustable rate mortgage...

If rates are rising and your adjustable-rate mortgage is about to reset, run the numbers and see how much your payment is likely to go up. If you are going to feel the pinch, consider refinancing into a fixed rate mortgage.

If you have a fixed rate mortgage...

Just because you got a fixed-rate mortgage doesn't mean you should fix it and forget it. When interest rates fall, you could save yourself significant amounts on your monthly payment by refinancing.

If you haven't applied for a mortgage yet...

Watching interest rate trends before you apply will help you determine what kind of loan to get. If rates are rising, you may want to stick with a fixed-rate mortgage to lock in a lower rate for the life of a loan. If rates are falling, an adjustable-rate mortgage might be the way to go.

If you have applied, but haven't closed...

If rates are rising, you may want to "lock-in", and have the lender guarantee that day's rate for your loan. If rates are falling, you may want to hold off locking in for as long as possible.