Select Fixed or Variable Rate loans on any of our Mortgage Information products in addition to mortgage amount, loan file date and loan type.
In a fixed-rate loan, the borrower is protected from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. Fixed rate mortgages are easy to understand and vary little from lender to lender. The downside to fixed rate mortgages is that when interest rates are high, qualifying for a loan is more difficult because the payments are less affordable.
A variable rate loan is the same thing as an adjustable rate mortgage, or ARM.The biggest advantage of an ARM is that it is considerably cheaper than a fixed rate mortgage, at least for the first three, five or seven years. ARMs are also attractive because their low initial payments often enable the borrower to qualify for a larger loan and, in a falling-interest-rate environment, allow the borrower to enjoy lower interest rates (and lower payments) without the need to refinance the mortgage.
A borrower who chooses an ARM may save several hundred dollars a month for up to seven years, after which his or her costs are likely to rise. The new rate will be based on market rates, not the initial below-market rate. If you’re very lucky, it may be lower depending on what the market rates are like at the time of the rate reset.
The ARM, however, can pose some significant downsides. With an ARM, your monthly payment may change frequently over the life of the loan. And if you take on a large loan, you could be in trouble when interest rates rise: Some ARMs are structured so that interest rates can nearly double in just a few years.
Because of this, Homeowners with variable or adjustable rate loans are excellent refinance prospects.
The Fixed vs Variable Rate loans Select is available on:
- 1st Mortgages
- 2nd Mortgage
- Equity Loans
This select can be an important element when selecting the right mortgage refinance lists for your mortgage marketing campaign.