Lock in your rate and leave it.
A fixed-rate loan does just what it says: it keeps the interest rate fixed throughout the life of the loan. The principal and interest on your loan payment also doesn’t change.
If you plan to own your home for a long time, or if you just like the comfort of knowing that the principal and interest on your loan payment won’t change, a fixed-rate loan might be the way to go.
- You’ll know exactly how much interest you’ll pay over the life of the loan.
- Peace of mind. The rate won’t change, and neither will your principal and interest payment change each month.
- Fixed rates are typically higher than initial rates for adjustable-rate loans.
- If rates drop below what you’re paying on your loan, you won’t be able to take advantage of the lower rate unless you refinance.