Wk6DQ2 - added to the term of the loan meaning you will pay...

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Variable rate loans have a heavy downside for borrowers when interest rates head upward. While the lender usually puts a maximum amount on how high the rate can increase say 5% over the life of the loan, generally wise consumers do well to plan for a worst case scenario. Rates are often recalculated every month, making it impossible to know exactly how much your loan will cost, or how long you will be paying off your loan. Even though your monthly amount may not change, any increase in interest simply get
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Unformatted text preview: added to the term of the loan, meaning you will pay more interest and it will take you longer to pay off your loan if the rates continue to increase. If interest rates get too high and you decide to change to a fixed rate loan, be prepared to pay a conversion fee. Will you loose sleep stressing that the interest rate will increase or will the increase in the rate have a direct effect on your monthly budget....
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