Mortgage refinancing concepts
Fixed rate mortgages have a set interest rate and a fixed payment for the life of the loan. Whatever the rate when you close the loan, that is the rate you will have until you sell the property, refinance, or pay off the home mortgage completely. You pay a premium for the certainty of a fixed payment since lenders usually charge slightly higher interest rates for a fixed rate home mortgage. On the other hand, the interest rate for adjustable rate mortgages rises and falls with the prime rate. Your interest rate and mortgage payments are higher when national interest rates are higher, and drop when national interest rates fall.