Fixed or Adjustable: Choosing Your Rate Type

A fixed-rate mortgage keeps the same interest rate for the whole term, so your principal and interest payment never changes. An adjustable-rate mortgage starts with a lower rate for a set period, then resets once a year in line with a market index.

When Fixed Makes Sense

If you expect to stay in the home for many years, or you simply want a payment that never surprises you, a fixed rate is hard to beat.

When Adjustable Makes Sense

• You expect to sell or refinance before the first reset
• You want the lowest possible payment in the early years
• Your income is likely to rise before the rate can adjust

Every adjustable loan has caps that limit how far the rate can move at each reset and over the life of the loan. Ask your loan officer to show you the worst case in dollars, not only the starting rate.