Recently interest rates have been very low. When rates are expected to go back up, you can get the lowest rate by agreeing to an adjustable rate. That means the rates can go up or down. Rates are starting to rise, so now would be a good time to review any loans you have to make sure you remember the terms. A home loan that is currently at 6% might become quite a burden if the rates go up to 9% or more. If you have a mortgage or debt consolidation loan that has an adjustable rate, you might want to consider refinancing to get a fixed rate.
Even if the fixed rate is higher, it can be a very good way to avoid the risk of skyrocketing interest payments in the future. Look back at historical rates to get an idea of what is considered average rates for your type of loan. You may find that interest rates that are average (over the past 50 years), would result in a payment of more than you can afford. That is a good indication that you should switch to a fixed rate loan.
Comments on this entry are closed.