What is the difference between a fixed-rate and a variable-rate mortgage?

A fixed-rate mortgage is one where the interest rate remains the same for the entire term of the mortgage. This means that the borrower’s monthly payments will stay the same, as the interest rate will not alter over the term of the mortgage. In Virginia, fixed rate mortgages are the most common mortgages available. By contrast, a variable-rate mortgage has an interest rate that can fluctuate over the life of the loan. This means that the interest rate and monthly payments may go up or down depending on the market and other factors. Because of the risk of a sudden and significant increase in payments, variable-rate mortgages are not as widely used in Virginia. In addition to the difference in interest rates, fixed-rate and variable-rate mortgages also differ in terms of length. Fixed-rate mortgages in Virginia are usually offered between 15 and 30 years, whereas variable-rate mortgages generally have shorter terms. This is because the risk of a dramatic increase in payments is greater over a longer period of time. Another key difference between fixed-rate and variable-rate mortgages is that the latter generally have lower initial interest rates. This can make them appealing to borrowers looking for a low initial payment, though it also increases their risk of eventual higher payments. Overall, the key difference between a fixed-rate and variable-rate mortgage is that the former has an interest rate that remains the same throughout the term of the loan, whereas the latter has an interest rate that can change over time. This can make a significant difference in the cost of the loan and the risk associated with it.

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What is the difference between a fixed-rate and a variable-rate mortgage?

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