Does the interest rate on my mortgage change over time?

Yes, the interest rate on your mortgage can change over time. In the state of Virginia, mortgage law dictates that the interest rate on fixed-rate mortgages cannot be changed during the life of the loan unless the borrower and lender consent to a change in the mortgage contract. This is because these mortgages feature a set interest rate that remains unchanged throughout the life of the loan. However, with an adjustable-rate mortgage (ARM) or hybrid ARM, interest rates can change over time. Unlike a fixed-rate mortgage, the interest rate on an ARM or hybrid ARM is tied to a financial index and varies through the life of the loan. Additionally, rates can be adjusted either annually, monthly, or every five, seven, or ten years, depending on the mortgage type. When considering a mortgage, it is important to understand the rate is subject to change in the long term and to determine if the financial risks going with the ARM or hybrid ARM are worth it. There are potential benefits to an ARM or hybrid ARM, including lower interest rates and smaller monthly payments for a specified period of time. However, it is also important to consider that these rates can increase significantly in the long-term and result in higher monthly payments. To make the best decision, it is important to carefully read through the mortgage agreement and speak with loan representatives to fully understand the long-term implications of the rate before signing on the dotted line.

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