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Brenda asks: “What is your opinion on fixed (4 yrs 2.77) or variable (5 yrs 2.35)?”
Interesting factoid: mortgage rates are at the same rates now as in 1933. How do I know that? We found an old mortgage once that was dated 1933 and the interest rate on it was 3%!
Anyway, onto your question. Nice dilemma to have…both of those rates are awesome! Cash flow wise, the difference in the monthly payment will be about $20/month for every $100,000 of the mortgage.
The thing with a variable rate is that you’re betting on the prime rate not increasing so much that it will get to be as much as, or more than, the locked in rate. In this case, there’s only .42% difference in the two rates, so the prime rate would only have to increase by that much in the next 4 years in order to make your payment as much as or more than the locked in mortgage.
I don’t have a crystal ball, but the prime rate hasn’t increased in a couple of years, so it seems to me it’s due to go up. If it were me, I would lock that sucker down at 2.77%. Worst case scenario, you’re still paying less than you would have in 1933!