title. i understand the difference between variable and fixed as definitions however with loans, ‘variable’ doesn’t quite register to me..
why on earth would someone consider that type of loan with a purchase of let’s say, a house?
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The idea is if you think that interest rates are currently high, you might get a variable interest rate loan so that you will benefit when they go down.
Sometimes you will get a small deduction on the initial rate and a lock in for a few years, so if you don’t plan to live in a house for more than a couple years it can benefit you.
From about 2010-2022 getting a variable rate loan was a very, very dumb idea (unless you were very sure you’d close it before the initial rate lock expired) because rates were incredibly low and the only significant movement possible was up.. which is what we’ve seen.
Getting such a loan now _may_ be a good time, as rates might go down in the future, but that’s not assured.
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