An official website of the United States government
The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before
sharing sensitive information, make sure you’re on a federal
government site.
The site is secure.
The https:// ensures that you are connecting to
the official website and that any information you provide is
encrypted and transmitted securely.
Interest rate stays the same for the term of the loan.
Your payments are predictable and not affected by interest rate changes in the market.
Interest rates could go down while you are locked into your mortgage at a higher-than-market rate.
Interest rate can increase or decrease during the term of the loan.
You might have a low rate for an initial period of 1, 3, 5, 7, or 10 years.
Monthly payments may initially be lower than fixed-rate loans.
The interest rate and your payment can increase significantly throughout the term of the loan.
If interest rates rise, do not count on being able to refinance into a lower rate fixed-rate loan, as your financial situation could change (e.g., due to a job loss)—and still, refinancing to a rate lower than the going rate may not be possible.
Interest Rate v. Annual Percentage Rate (APR)
The interest rate does not factor in any of the non-interest closing costs. Compare loan offers using the Annual Percentage Rate (APR). Think of the APR as a “fully loaded price tag.” In other words, it combines the cost of both the interest and some–-but not all–-of the non-interest closing costs, and then calculates that combined cost as a yearly rate.