With interest rates on the rise, you may be wondering the difference between a fixed rate and an adjustable rate loan and if one is better during this time of increase. MMCCU can help! Our loan team will work with you to understand your situation and determine which route is best.
In short, with a fixed rate loan the interest rate is set when you take out the loan and will not change. With an adjustable rate mortgage (ARM), the interest rate may go up or down. Many ARMs will start at a lower interest rate than fixed rate mortgages.
Why You Might Choose a Fixed Rate:
- You value consistency with payment amounts (easier to budget)
- Interest rates are low or expected to climb
- You plan to be in your home for a long time (Mortgage)
Why You Might Choose an Adjustable Rate:
- You want the lowest possible rate and payment
- You can afford to take some risk
- Interest rates are high and expected to fall
- You plan to be in your home for only a few years (Mortgage)
At a time when interest rates are high, an ARM will allow you to take advantage of the upcoming drop in rates because you won’t be locked into a specific rate. However, if interest rates are climbing or if a steady, predictable payment is important to you, a fixed-rate loan may be the way to go.
“Adjustable rates may seem attractive now during this climbing interest rate environment, however, you have to take into account an important factor: if rates remain high, your adjustable rate will increase in a relatively short amount of time when your adjustable rate feature kicks in,” explained Jerry Litwaitis, VP of Lending. “Our rates at MMCCU, although higher than in the past, are still low compared to other unsecured loans, mortgages, or credit cards. Our unsecured rates may seem high, but compared to the most popular credit card rates, they are still lower and fixed for the duration of your loan term.”
MMCCU members can also take advantage of the Kwik Cash loan program.
“Our adjustable rate Kwik Cash loan product is also lower than most unsecured loans out in the market (rate is tied directly to the prime interest rate),” explained Litwaitis. “This product, although an adjustable rate, has been historically lower than other credit card or unsecured loan options.”
Find MMCCU rates here. Contact our mortgage loan team at 715-387-8686.