How to Quickly Decide Between A Fixed and Variable Refinance Loan

If you’re considering a refinance loan, you have a multitude of choices available to you. The decision as to whether to go with a fixed interest rate or a variable one is as deeply personal as the decision about which political candidate to support.

A fixed interest rate - refinance loan offers you security, so in troubled economies where interest rates are rapidly rising or you fear they could, the fixed interest rate might make more sense. The drawback to this approach is that security comes with a price. There can be significant differences in rates charged and – depending upon your lender – these differences could result in your spending thousands of dollars more over the long term for your refinance loan.

With that said, a variable interest rate - refinance loan is generally much lower than its fixed rate counterpart. If mortgage interest rates are consistently falling or holding steady you might just be better off going with one of these refinance loans.

A variable rate mortgage refinance loan typically has built-in controls to offer you a certain amount of security. For instance, it’s not uncommon for a variable rate loan to cap the amount by which the rate can increase within a given period of time. In addition, most variable rate loans will also guarantee that your rate will never exceed a maximum ceiling.

In a lot of situations, what can go up can’t come down. What I mean by this is that there is usually a bottom limit in place specifying that your rate will never drop below a certain threshold. So even if rates drop beneath that pre-determined point, you’ll never pay less for your loan.

So which is best for you? That depends on you, your financial situation, and the level of security you need.

If your income is sufficient to absorb the additional cost that a more expensive mortgage payment could entail, you might be better off with a variable rate refinance loan. When you consider that rates could drop considerably, the potential for cost savings could be worth the gamble.

It all comes down to an acceptable level of risk. So which refinance loan works best for you – fixed or variable? Why not use the free consultation option above, and find out in the next few hours?

Need to unlock your home's equity - but have a few questions? Why not consider a free private email consultation with me, Darrin Roseborsky? There's no obligation or commitments to worry about. Just helpful answers to your questions. Use the short form in the top-right corner to get started. And in a few minutes, you'll have the answers to all of your questions.