Are Mortgage Rates Fixed?
Mortgage rates can be fixed or variable, depending on the loan you choose. A fixed-rate mortgage keeps your interest rate and monthly payment the same for the entire loan term, while adjustable-rate mortgages change periodically after an initial fixed period.
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How a Fixed-Rate Mortgage Works
With a fixed-rate loan, the lender agrees to hold the interest rate constant from closing until the loan is paid off. Your principal and interest payment will not change, even if market rates rise or fall. Common fixed terms are 30-year and 15-year mortgages, though some lenders offer 10-year or 20-year options.
When Rates Can Change
Adjustable-rate mortgages start with a fixed period, often 5, 7, or 10 years, and then the rate adjusts based on a published index plus a margin. After the initial fixed period, your rate and payment can go up or down at specified intervals, subject to caps that limit how much the rate can move.
What Locks In Your Rate
A rate lock is a lender's promise to hold a specific rate for a set number of days while your loan is processed. If rates rise before closing, the lock protects you. If rates fall, you generally keep the locked rate unless you have a float-down option, which may cost extra.
Fixed vs. Adjustable at a Glance
| Feature | Fixed-Rate Mortgage | Adjustable-Rate Mortgage |
|---|---|---|
| Rate stability | Same rate for the life of the loan | Fixed for an initial period, then adjusts |
| Payment predictability | High | Lower initially, but can change |
| Risk of rate increases | None | Possible after fixed period ends |
| Typical terms | 10, 15, 20, or 30 years | 5/1, 7/1, or 10/1 ARM |
Which Loan Should You Pick?
If you value certainty and plan to stay in the home for many years, a fixed-rate mortgage removes the guesswork. If you expect to sell or refinance within a few years, an ARM can offer a lower starting rate, but you accept the risk of future increases.