Adjustable Rate

An adjustable rate is a type of loan or mortgage where the interest rate can change over time based on market conditions. Unlike fixed-rate options, where the rate stays the same, an adjustable rate initially offers a lower rate for a set period, then adjusts periodically (e.g., annually). These adjustments are tied to a specific financial index, plus a margin set by the lender. This means your payments could go up or down over time, depending on interest rate movements. Adjustable rates can be beneficial if rates stay steady or decline, but they carry some uncertainty due to potential increases.