| | Pros | Cons |
|---|
| Fixed-rate loan | - You know exactly what each month's payment will be, which can help you budget for them
- You won't have to worry about increasing payments
- if interest rates are low when you apply for the loan, you can lock in that favorable rate
| - You won't benefit from lower payments if interest rates fall
|
|---|
| Adjustable-rate loan | - If interest rates fall, your monthly payments may be smaller
- If interest rates are high when you apply for the loan and then drop, your rate may be reduced
- Initial interest rate may be lower than with fixed
| - Can be harder to budget, since you don't know what your payments will be
- When interest rates rise you'll have to pay more interest
|
|---|
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