When considering a mortgage, one of the key decisions is whether to choose a fixed or variable-rate option. Here are some advantages and disadvantages of each in 2024.
Fixed-rate mortgages offer predictability and stability, as the interest rate remains the same throughout the term. This can be advantageous in times of economic uncertainty, where interest rates are expected to rise. Borrowers know exactly what they’ll pay each month and can budget accordingly. However, fixed-rate mortgages often come with higher rates than their variable counterparts, which can mean paying more interest over the life of the loan.
Variable-rate mortgages offer flexibility and the potential for lower rates over time. When interest rates are low, borrowers can enjoy lower payments and potentially pay off the loan faster as a result. However, rates can fluctuate over the life of the loan, which can create uncertainty around monthly payments. Borrowers could end up paying more in the long run if interest rates rise significantly.
Ultimately, the decision to choose a fixed or variable-rate mortgage depends on individual circumstances and goals. Consider factors like your financial situation, risk tolerance, and long-term plans before committing to a particular option.
