If I am using the mortgage payment calculator and the fixed and adjustable rate mortgage comparison calculators, is it wise to consider getting an adjustable rate mortgage when rates are this low?

A fixed rate mortgage offers predictable monthly payments for the life of the loan. Adjustable rate mortgages offer lower rates and payments in the immediate future, but can result in sharply higher payments in subsequent years should mortgage interest rates rise.  It is certainly prudent to weigh the difference in interest rates and monthly payments between these two different loan products.  It is generally true, that when the overall level of interest rates is low, the spread between short term rates and long term rates are not very significant.  During these periods the advantage of the low starting rate of an adjustable rate mortgage is diminished and a borrower has to consider the likely hood that rates are more likely to increase rather that decrease or even stay stable.  The mortgage calculators can be used to evaluate the difference in payments between the fixed rate loan and the adjustable rate loan.  The adjustable rate mortgage calculator also allows for input on future rate changes so the borrower can more thoroughly investigate the impact of rising mortgage rates.

This entry was posted on Wednesday, December 10th, 2008 at 5:03 pm and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.