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Q&A

If you have questions about this change, you're in the right place. Our editors, experts, and community of change optimists have answers!

wishuponastar

Question:fixed rate or adjustable rate?

is one better than the other in this economy?

Asked by wishuponastar on 4/2/08 1 Answer»
JohnBroughton

Answer:

Adjustable rate mortgages have a lower interest rate - but then you have to worry when the adjustable period (1 year, 3 years, whatever) is over, the interest rate will rise. You can certainly plan to refinance before the initial period is over - but there are always costs to refinancing, and you'll be guessing as to whether rates will rise.

As a rule of thumb: if you're almost positive you'll move in a couple of years, get a three or five year adjustable rate mortgage. If you're not sure when (or if) you'll move in the future, get a fixed rate mortgage - the interest rate difference (today) isn't that much, and you'll sleep better at night because you know your mortgage payments won't go up.

Answered by: JohnBroughton on 4/16/08
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