Fixed or variable... what to do?

You have decided to move forward and purchase a home... but now you have to decide - fixed or variable rate? You have heard lots of talk, but what does it mean and which one is right? No one can answer that question except for you.

Fixed rate means the rate is locked in for a specific period of time. The most common is five years. The rate and payment are fixed so nothing will change over the five years.

Variable means the rate is based on the Prime rate - currently it is 2.50%. This is low; the lowest it has been in history... so we know it can not go any lower... the rate will only go up. The question is when? Again - my crystal ball fell off my desk last week and I can't give you an answer.

A variable rate mortgage changes when prime goes up, so the rate on your mortgage adjusts upwards and so will your payments to ensure you are paying off sufficient amount of principle on your mortgage. SO what is better?

You have to decide if you are okay with the fact that your rate may increase over the term causing payments to increase as well - if the rate falls again, we at Libro do not reduce your payment... we encourage you to pay more and therefore pay off the mortgage faster.

At Libro, we offer the best of both worlds... a three year protected prime mortgage.

What - another option???

Your payment is based on the three year rate and this is the cap. Your rate will not rise higher then the cap, but what we actually charge you is an interest rate based on Prime - currently much lower the then posted 3 year rate. So what happens to the difference? It is applied directly to the principal of the mortgage, helping you pay off your mortgage quicker!

So which one is best for you? The one are you confident in choosing and are NOT going to lose sleep over... that is the term that is right for you!