When To Refinance Your Home

(continued)

The New Mortgage - Variable or Fixed Rate?

Variable Rate	Fixed Rate
Initially lower interest rate than with a fixed rate loan, but the rate will increase if interest rates go up, or decrease if interest rates go down. Most variable rate mortgages have a cap on annual rate increases and on lifetime increases.* Usually preferred for short term home ownership, e.g., 1-3 years.	Rate does not change if interest rates go up or down. Best for homeowners with a fixed income or those who plan to keep their home for many years. Rates and monthly payments are typically higher than for variable rate loans, at least initially. Fixed rate loans may not be assumable.

*Be certain that that annual cap is part of the loan and examine carefully the index to which it is tied.

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