My little passion for home equity loans
To cover for this eventuality, banks set the interest for fixed rate mortgage loans higher than that for adjustable rate mortgages. A convertible home mortgage loan initially has an adjustable rate, but can be converted to a fixed rate during a certain period of the loan's term. This is a good choice of loan if interest rates are currently high, but you foresee a drop in rates. You can take advantage of the lower interest rate of an adjustable rate home mortgage when interest rates are high, then lock in a better interest rate for the life of the loan as soon as rates drop. A balloon home mortgage opens with an introductory period during which your interest rate is not only fixed, it is almost as low as the interest rate for an adjustable rate mortgage loan, rather than being high like a normal fixed rate loan.