This can depend upon several different factors.
Fixed rate loans have a stated interest rate that does not change over the life of the loan, whereas the rates on adjustable rate loans are linked to an index and change as the index rate changes.

Many mortgages, such as a 5-Year Fixed (30 Year), start as a fixed rate loan and then convert to an adjustable rate. Adjustable rate loans have more risk due to the possibility that the interest rate could increase.

However, because you are assuming some of the risk the lender will generally reward you with a lower interest rate. These loans are best for borrowers who do not plan on keeping the loan for the full term.

What is the difference between the interest rate and the APR?

The interest rate is the cost to borrow the lender's money. The APR represents the total cost of the mortgage over the life of the loan, including closing costs and lender points.

Home Buyer Tip

Borrow up to 100% without paying mortgage insurance. By obtaining both a first and second loan instead of a single loan.

Homebuyers can borrow up to 100% of their home's value and avoid paying private mortgage insurance (PMI).

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