HOME EQUITY LOANS Fixed Rate vs Adjustable Rate LoansA fixed rate loan is just that, a loan where the rate of interest is constant until the loan is repayed. This is the type of loan you want if you like to sleep at night. Adjustable rate loans are tied to Prime Rates and these rates can and do change often during the course of a loan. If you are considering an adjustable rate loan, there is a good possibility your interest rate could move up every quarter. It is also possible your interest rate could decline each quarter, but that's not likely. Right now interest rates are as low as they have ever been, so in my opinion there is only one way for them to go and that is up. It's always possible that the interest rates could stay right where they are for the next 30 years and that would make adjustable rate loans a great value, because they tend to be a little lower that fixed rate loans. I don't think that will happen, but if you like to gamble, go for it. My final thought is in the market we are in right now it makes more sense to have a stable loan that won't give you ulcers and lets you get a good nights sleep. The adjustable rate mortgage does have it's place though and if interest rates rise an adjustable rate mortgage may be something to look at, but be very careful of this type of loan, losing a home is something you may never recover from
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