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

In Kansas, the difference between a fixed-rate and a variable-rate mortgage is the interest rate applied to the loan. A fixed-rate mortgage has an interest rate that remains the same for the entire term of the loan, while a variable-rate mortgage has an interest rate that changes over time, usually in relation to an index such as the Prime Rate. With a fixed-rate mortgage, borrowers have the advantage of knowing exactly how much their monthly payment will be for the entire duration of the loan. This makes budgeting and planning for the future much easier. On the other hand, a variable-rate mortgage offers the potential for lower monthly payments, because the interest rate typically starts out lower than with a fixed-rate mortgage. This makes it an attractive option for borrowers looking to keep their monthly payments as low as possible. The downside to a variable-rate mortgage is that the interest rate can increase over time, resulting in higher monthly payments. This is why borrowers should always take into consideration the length of the loan when deciding whether to go with a fixed-rate or a variable-rate mortgage.

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

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