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Re-Post First Time Homebuyer Question #8

Blog by Diane Cardoso | December 1st, 2011

Apologies for the techno glitch!  Should I choose a variable rate or a fixed rate mortgage? The mortgage options that are right for you will depend on your personal preferences and situation. Some Buyers prefer a fixed rate so they know what their monthly payments will be for the term of the mortgage (eg; 3 yr, 5 yr etc.). A fixed rate also protects you if interest rates go up.  With a variable rate, the interest rate changes based on your bank's prime lending rate. The variable rate can be the most inexpensive option for you on a monthly basis.  If the interest rate fluctuates, you will either be paying more to your princiapal or less to the prinipal part of your mortgage payment.  Your Lender can provide you with more suggestions as to which is the beneficial mortgage term for you.