We have recently created a free visual guide for seniors who are looking to understand how reverse mortgages work.

This was the title of a recent article by Jack Guttentag, the self-styled Mortgage Professor. And when the Mortgage Professor Speaks, people listen; his column has been reverberating around the blogosphere for over a month, and now it’s my turn to weigh in.

The crux of Mr. Guttentag’s argument is that there is nothing to compare reverse mortgages to, so it’s ultimately impossible to determine whether they are too cheap or too expensive. Still, he points out that the closing costs seem reasonable compared to other mortgage products, and that the most expensive component is the FHA mortgage insurance premium which is necessary to keep the program financially viable. Guttentag concludes by arguing that on a short-term basis, reverse mortgages are hardly economical, but on a long-term basis, the upfront costs can be rationalized, and at prevailing rates, the current APR is a modest 5%.

In my opinion, this final conclusion is really the only one that actually stands up. Even without doing the math, it’s obvious that any mortgage (conventional or reverse) is not cost-effective if you intend to repay it within a few years of obtaining it. And generally speaking, the longer you hold it, the more economical it is. This is not in dispute.

The Mortgage Professor’s first two points, however, are a bit more dubious. Beginning with FHA insurance premium, this IS both expensive on an upfront (~$4,000) and annual (~$300) basis. Because reverse mortgages are inherently risky from a lender standpoint, the practice of insuring them makes perfect sense. Just because it’s necessary, however, doesn’t mean it shouldn’t be a consideration when analyzing the costs of a reverse mortgage. If you obtain a reverse mortgage, it needs to be paid, but if you don’t obtain one, then of course you don’t need reverse mortgage insurance. This might sound like a tautology, but it’s still a point worth making.

Finally, since there is no product comparable to an HECM reverse mortgage, it’s true that it’s impossible to say whether it’s cheap relative to other reverse mortgages. Still, we can say with near certainty that it’s probably going to be cheaper than any other alternative that doesn’t involve an institutional lender. Borrow money from friends? Cheaper. Sell your current home and buy a smaller one? That’s cheaper, too. Save money by simplifying your lifestyle? Definitely cheaper. Ask your heirs (especially if they want you to keep the home) if they can lend you money using the same structure as a reverse mortgage? Probably cheaper, too.

If you still want to obtain a negatively amortizing home equity loan with high upfront costs and pay interest on interest (aka a reverse mortgage), know that it will be cheaper than borrowing money with your credit card. Compared to almost anything else, however, it will cost you more.

As part of the ongoing overhaul of the reverse mortgage industry, HUD (via the FHA) has revamped the test that counselors are required to pass before they can work with prospective borrowers. According to the front lines, the test is quite hard!

Some background: HUD reverse mortgage rules clearly stipulate that borrowers are  “required to receive consumer information from an approved HECM counselor prior to obtaining the loan.” Previously, this session was treated as perfunctory (it probably still is by many participants), as counselors breezed through a list of caveats and pitfalls to prospective borrowers. These sessions were (and still are, to some extent) conducted by phone, often involving individuals other than the actual borrower.

There were many reports of abuse and conflicts of interest (counselors were using their positions to refer customers to specific lenders on a commission basis), which the General Accountability Office (GAO) identified in a recent report, completed after participating in 15 interviews on an undercover basis. As a result, the rules were tightened, and the counseling requirements enhanced. Prospective borrowers are now encouraged to complete the session in person and must sign an affidavit stating that they understand the risks, etc.

In addition, the certification test for counselors has become more difficult, to the extent that even veteran counselors are finding it difficult to pass. The result is not necessarily that unqualified counselors will be prevented from counseling, but rather than all counselors should be more knowledgeable in the both the benefits and drawbacks of reverse mortgages, and should be able to pass this on to potential borrowers.

From the standpoint of borrowers, this means that the counseling session should theoretically be more useful. If you are even considering obtaining a reverse mortgage, you may as well as undergo counseling as early as possible in the process, before you have committed (either psychologically or to a lender) to going forward. This way, you can fully weigh what the counselor tells you, and make a better-informed decision afterward. If you wait until right before you sign the documents to complete the counseling session, you risk treating it as perfunctory, since it won’t possibly be able to influence your decision.

From the standpoint of counselors, meanwhile, you had better study hard!

I haven’t seen any statistics on the precise reasons for borrowers obtaining reverse mortgages. Anecdotally, though, it seems a sizable portion are obtaining them for no “real” financial need, and are instead using them merely to maintain existing lifestyles. It would be one thing if that translated into moderate subsistence, but quite another if it meant affluence.

What do I mean by affluence? To be honest, I’m not exactly sure, because the term means different things to different people. For some, it conjures up images of sumptuous luxury, while for others, it brings to mind certain middle-class comforts. For the purposes of our discussion, it’s probably better to think of the concept in relative terms. Let’s define it as a lifestyle that is extravagant relative to one’s financial condition.

Using the proceeds of a reverse mortgage to maintain or even improve one’s affluent lifestyle is an implicit acknowledgement that one’s lifestyle is unsustainable and requires “outside” sources of cash to support. Remember that a reverse mortgage is ultimately just a loan. It avoids this label because it isn’t usually repaid by the borrower, and is couched in clever terminology such as monetization. Despite being different from a loan in form, however, it is the same in principle. It accumulates interest, is secured by collateral (one’s home). and must be re-paid. While the terms of a reverse mortgage are certainly better than a credit card loan, the idea behind both is the same. Think about it this way: would you ever borrow $50K (or more!) using your credit card, simply so that you could continue to make fancy purchases and nice vacations. I suspect the answer is probably not.

That’s not to say that affluence is a vice, or something that should be shunned. On the contrary, I think that those who worked their entire lives and paid into the system are entitled to enjoy a comfortable retirement. Still, there is no free lunch, and borrowed affluence is irresponsible. Those who desire such a lifestyle should accept the trade-offs and compensate for their spending by making cutbacks in other places, namely by downsizing into a smaller house. This solution could free up $100K (or more!) in cash, depending on the difference in price between your old and new home, and best of all, leave you debt-free. Maintaining your current lifestyle AND continuing to live in the same home when you can’t afford to do so naturally is naive. If you like your house, then you should consider spending less on your lifestyle. If you cherish your lifestyle, consider moving into a smaller house.

Defenders of this practice would probably argue that they are simply “monetizing” what is rightfully theirs, and that they shouldn’t have to economize when they are sitting on a pile of potential cash. This mindset blithely assumes that one will be healthy for as long as the reverse mortgage ATM has money in it and will die shortly thereafter. The same applies to he who obtains a reverse mortgage in order to compensate for retirement account (i.e. stock market) losses under the assumption that it will inevitably rebound. This ignores the possibilities that one will spend all of the proceeds from the reverse mortgage and/or that one will live longer than expected and/or that one’s health could suffer. If any (or all) of these occurrences should transpire, it would necessitate sudden and radical changes in your way of life. When you look at it this way, taking out a reverse mortgage to fund affluence looks misguided at best and foolish at worst.

In short, think twice before obtaining a reverse mortgage so that you can continue to live beyond your means. While you may get lucky and “beat the system,” the law of averages means that you probably won’t, and your Day of Reckoning will only be delayed.

With today’s post, I want to look at reverse mortgages from another perspective, or should I say another’s perspective. In other words, I want to examine the role that one plays as a son/daughter in this process. Given that all reverse mortgages (by virtue of the age 62+ requirement) are taken out by older people, and that the burden of taking care of the elderly will increasingly fall on younger generations, I think this is an important issue.

If one of your parents is examining the possibility of taking out a reverse mortgage (or even if the idea is yours), the first step is to sit down with your parents and try to completely understand their financial situation. Ideally, all children and close family members should be involved in the discussion. As part of this conversation, you need to undertake a basic audit of your parents’ finances. What kind of revenue do they have (social security, income, pension, etc.), what are their basic (i.e. cost of living) expenses, and what are their assets and liabilities? After taking account their age and health, you should have a rough idea as to the financial shape they are in.

It is also important to try to understand their expectations. Do they desire to live affluently or simply? Are there are big purchases that they expect to make; will they be doing a lot of traveling? Do they expect to move into an independent or assisted living facility, or would they prefer to remain completely independent for as long as possible. Its your responsibility first to try to understand their expectations, and then after taking account of their financial position, to manage them. If you see a big gap between their expectations and financial reality, then they will obviously require some form of support.

Obviously, the most basic way of supporting them would be for you and your siblings to simply mail them a check every month. If this is unrealistic and/or inadequate, then you will need to think more creatively. The next best alternative would be to formally loan money to your parents. Rather than having them pay you back while they are alive (which would defeat the purpose of loaning to them), it would be understood that the loan would be repaid from their estate, after they pass away. While it is understandable that you would feel guilty about loaning money to your own parents, consider that (assuming you can afford it) it is a solution that benefits everyone, and just like with a reverse mortgage, they shouldn’t have to worry about repaying the loan, since such will be taken care of post-mortem.

You should also consider buying their house outright from them. In this way, both of you can avoid all transaction costs, they can continue to reside in the home for as long as they please, and in the process, they secure plenty of cash to support themselves into retirement. This is an especially good solution if the home is still mortgaged, since they can kill two birds with one stone. It also solves the problem that is posed when one spouse is of qualifying age for the reverse mortgage, and the other isn’t. In such situations, some will go ahead foolishly and obtain a reverse mortgage anyway, only to have one of the parents kicked out of the house when the other one dies, and the loan becomes due.

The final option is to go ahead and help your parent(s) obtain a reverse mortgage. Because of high fees and the accumulation of interest, this is often the least economical option, and I recommend it only as a last resort, to be used when all other options have been exhausted. If your parents are obtaining the reverse mortgage so that they can (continue to) live affluently, perhaps you can recommend an alternative, such as downsizing into a smaller house and/or tweaking their standard of living. This would also be a good time to re-suggest loaning them money yourself, which would serve the same function but would better preserve your inheritance. Speaking of which, this is an important consideration, and one that should be reflected in your parents’ plans.

A final note: when helping your parents to obtain a reverse mortgage, you must make sure that the decision has been made by them and that they fully understand its implications. Even if they are elderly, they must undergo counseling and sign the paperwork themselves. There have been a few recent cases in which adult children fraudulently used their parents’ names to obtain reverse mortgages for themselves, and were later discovered. Lenders and regulators are now on the lookout, and it’s important that the loan is of your parents’ own volition.

As of February 1, reverse mortgages will be significantly more difficult to obtain for residents of cooperatives (i.e. condominiums).

That’s because HUD recently changed the rules governing the process for this class of borrowers, by making the approval process more rigorous. Specifically, condo dwellers applying for reverse mortgages will have to wait a minimum of 8 weeks so that HUD can confirm that the dwelling meets their lending standards. In a recent article on the rule changes, one expert confided that the true wait time is likely to be closer to 18 weeks. In addition, all projects that have already been approved will need to be re-approved by HUD.

Of course, there is always a back door, and in this case, that means seeking what’s known as “spot approval” directly from the lender. Under this system, lenders can certify that individual units meet HUD lending standards, but take responsibility if it is later determined that their assessment was invalid. In order to crack down on lenders that were abusing their power, however, the FHA will replace this with a new version, under which any lender that confers spot approval on a project must also bear responsibility for all future loans against units in that same mortgage. Given the level of potential liability that carries, it’s no wonder that so few lenders are still willing to proceed with such spot approval.

On the one hand, this system is necessary, since condos were among the biggest price losers in the housing bust. From the standpoint of HUD, then, insuring reverse mortgages on these properties against default (i.e. that the home price falls below the value of the mortgage) is incredibly risky. The only way to mitigate against this possibility (and stave off having to ask Congress for a bailout, incidentally) is to approve condo loans on a case-by-case basis. For those seniors that live in private communities that are legal incorporated as cooperatives but whose homes are separated from each other, they can apply for “site condo” designation, which is apparently easy to obtain but complicated to undo.

Given the FHA’s financial troubles, this development was somewhat foreseeable, and probably necessary. And while it represents a small obstacle, it’s certainly not a roadblock for those that live in condominiums and want to obtain reverse mortgages. You’ll just have to be patient.

It has been reported that Congress is considering dealing with the mess of Fannie Mae and Freddie Mac by simply abolishing them. No privatization. No permanent nationalization. Certainly no return to hybridization. Instead, a neat and tidy sweeping into the dust-bin. While other columnists are busying themselves focusing on the complete set of ramifications, here, we’re mainly interested in the potential impact on reverse mortgages.

For whatever reason, Fannie (rather than Freddie, in this case) came to dominate the market for reverse mortgages. At its peak in 2008, it accounted for 90% of the funding of all HECM loans (the FHA-mandated reverse mortgage standard) which it purchased in securitized blocks – the reverse mortgage equivalent of the mortgage-backed securities (MBS) that have gained much notoriety for their role in fomenting the credit crisis. This market share has since shrunk to 10%, however, with most of the slack picked up by its competitor, Ginnie Mae.

Given that the reverse mortgage industry has continued to function (quite smoothly, in fact) in the absence of Fannie Mae, then, it seems that its complete disappearance from the scene shouldn’t matter too much. On the surface, this is probably true, but only because reverse mortgage originations remain small, as a fraction of overall mortgage lending activity. Thus, the industry’s capital needs can easily be met by one of the various mortgage giants (Fannie, Freddie, Ginnie, etc.) and a handful of other institutional investors.

The danger is that the reverse mortgage market is basically a monopsony (only one buyer, the reverse of a monopoly); as long as that buyer remains willing, everything is fine. When that buyer gets full and/or changes its mind, well, other buyers must be found. In this case, it would be difficult to find a buyer with the same capacity as Ginnie Mae.

If the industry continues to grow as fast as many experts expect (and lenders hope), however, lenders will probably have to find other sources of capital. Institutional investors are returning to mortgage-backed securities, but in small numbers and very cautiously. If Ginnie Mae cuts back on its purchases and/or reverse mortgage lending activity outpaces Ginnie’s ability to buy securitized HECM mortgages, lenders could be forced to raise interest rates, lower borrowing limits, and impose any number of other limitations on new loans in order to make them attractive for private investors.

In addition, while Fannie Mae’s overall market share of reverse mortgage lending has shrunk, its share of variable-rate mortgage remains sizeable. Given that most reverse mortgage borrowers prefer the fixed-rate version, this isn’t currently a problem. If Fannie were to disappear, variable-rate reverse mortgage lending would probably trickle to a halt. That could make it difficult for borrowers to select the line-of-credit payment option, and would instead have to opt for monthly payments and/or lump sum payment.

This has been a much-mooted question ever since the National Consumer Law Center issued a report in 2009 that concluded that there was indeed an eerie connection between these two types of mortgages. It implied that the recent boom in reverse mortgages would surely end in bust and losses, just like the explosion in subprime loans. But how accurate is this assessment?

According to Jack Guttentag, the self-proclaimed Mortgage Professor, the comparison is hardly apt: “In fact, the two programs could hardly be more different, and there is no chance of a similar fiasco. Subprime loans imposed repayment obligations on borrowers, many of whom were woefully unprepared to assume them, and which tended to rise over time….But reverse-mortgage borrowers assume no repayment obligation at all…They cannot default on their mortgage because the obligation to make payments under an HECM is the lender’s, not the borrower’s.” He argues further that bank losses associated with reverse mortgages will be non-existent (compared to the extensive sub-prime losses), because the majority are insured by the FHA.

While these are certainly fair points, the counter-argument is that home price declines erode the system behind reverse mortgages just like with sub-prime mortgages. Of course, the FHA stipulates limits to the maximum loan size that reverse mortgages borrowers are eligible for – a major difference. In this sense, it would be as if subprime borrowers were required to make 40% down-payments, so as to minimize the possibility of default. Furthermore, the insurance premiums that the FHA collects are theoretically supposed to offset any losses incurred from declines in property values. In that sense, the possibility of any kid of crisis, akin to the blowup in subprime, seems unlikely, if not altogether impossible. There will be no widespread defaults, no foreclosures, though perhaps some losses which will be ultimately born by the government (taxpayers).

When this round of reverse mortgages begin to mature (i.e. when the borrowers die), however, a crisis of conscience could arise. This crisis will not be financial in nature, but psychological. While the Mortgage Professor correctly points to a survey that established a high degree of borrower satisfaction with reverse mortgages, this could ebb when reverse mortgages come due. In other words, all is well and good when the money is flowing into borrowers’ hands. When it comes to repaying the mortgage and/or turning over the property, though, many borrowers’ (and their heirs) will probably feel some sense of regret. That’s because the very nature of reverse mortgages is such that they are very expensive, both upfront and over the life of the loan.

When borrower realize that in hindsight, the money they were getting wasn’t free, it could provoke the same accusations currently being leveled against subprime lenders: aggressive marketing tactics, inadequate screening of borrowers, a lowering of lending standards, high fees, etc. A crisis? Perhaps not. A growing controversy? Maybe so.

I recently read a press release (masquerading as a “news article”) in which one reverse mortgage lender aimed to refute 10 carefully selected reverse mortgage myths. While the refutations are certainly accurate, many of them struck me as unfair, and were deliberately worded so as to be easy to refute. Thus, I’d like the opportunity to refute their refutations.

Myth: If I take out a reverse mortgage the lender will own my home.

While this is not legally the case (the title still belongs to the borrower, who retains his rights as the homeowner), it can quickly become so financially. Those that borrow the maximum they are entitled to will quickly discover that they own less than half of the value of the home, and that their equity will continue to fall (both in nominal and relative terms) over the life of the home, such that when the loan matures, the lender will be entitled to the majority of the proceeds. In addition, the lender can force the premature sale of the property if the borrower fails to maintain the property and/or pay property taxes.

Myth: My children will be responsible for the repayment of the loan.

If your children want to keep the property after the borrower (you) dies, they MUST repay the loan. Otherwise, the lender has no basis, legal or otherwise, for contacting the children of the borrower.

Myth: I cannot get a reverse mortgage if I have an existing mortgage.

Borrowers with high LTV primary mortgages (perhaps 75%) will find it very difficult if not impossible to obtain a reverse mortgage, especially as a result of the recent lowering of FHA lending maximums. For those whose primary mortgage are close to being repaid, this myth is indeed a myth, and they can in fact use some of the proceeds from the reverse mortgage to repay the primary mortgage.

Myth: Only low-income seniors get reverse mortgages.

If this myth was reworded to read that “Only low-income seniors SHOULD get reverse mortgages” it would no longer be a myth. While it is true that income is not a factor when applying for a reverse mortgage, those whose financial/income positions are strong would have no reason to consider a reverse mortgage. In the event that one’s income declines or ceases, then one would perhaps have a basis for considering a reverse mortgage.

Myth: If I outlive my life expectancy, the lender will evict me.

It’s true that the lender would have no legal basis for doing so, under the terms of the loan. It’s worth pointing out, however, that loans are structured according to actuarial assumptions, such as life expectancy. Thus, if you outlive your life expectancy, you can expect your (heirs’) equity in the home to be even less than otherwise. The only point I’m trying to make here is that there is no free lunch by living longer, since the loan will accumulate interest until it is repaid.

Myth:  Reverse mortgage lenders pressure seniors to buy additional financial products.

While I’d like to believe that the majority of reverse mortgage lenders don’t engage in so-called cross-selling, more than a handful of lenders apparently do, necessitating new legislation to ban the practice.

Myth:  There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.

Thanks to recent FHA legislation, this myth can be firmly declared a myth. Borrowers are now required to undergo counseling with an FHA-approved adviser prior to obtainingthe reverse mortgage.

Myth: There are restrictions on how reverse mortgage proceeds may be used.

It is unfortunate, in my opinion, that there aren’t restrictions. While borrowers (and especially lenders, for marketing purposes) are probably happy that they can use the proceeds of a reverse mortgage for “frivolous” expenditures, they will probably regret this leniency in hindsight, when genuine financial necessity arises and/or they have very little equity left in their homes.

Myth:  Reverse mortgage lenders take advantage of seniors.

As with the “myth” about cross-selling, I’d like to believe that the majority of reverse mortgage lenders do not try to exploit their customers and are simply fulfilling legitimate demand for the service that they are providing. The reality, however, is that reverse mortgages are inappropriately marketed (and often sold, it seems) to customers that simply do not need them. While such borrowers still have every right to obtain reverse mortgages – this being a free country – it is arguable that lenders exploit their ignorance.

Myth: I’ve heard I won’t qualify for a reverse mortgage because of my limited income.

This is basically a restatement of an earlier myth, and it seems it was added by the lender solely to underscore the eligibility of low-income borrowers. What was I just saying about exploitation?

I think a large portion of my posts begin with some variation of the phrase, “There is a great deal of confusion surrounding aspect xx of reverse mortgages.” While this certainly speaks to a lack of originality in my part, let’s face it, reverse mortgages are complicated. There are a lot of aspects which seem superficially similar to conventional mortgages, but are actually quite different. Reverse mortgage interest is one such aspect.

It’s not the the calculation of reverse mortgage interest which is complicated. Just like any other loan, interest is calculated on the outstanding balance of the loan. Whether you take the proceeds from a reverse mortgage as an upfront payment or in installments, interest charges will be calculated monthly based primarily on the amount of money that has been withdrawn to date. However, since you aren’t expect to make payments (interest or otherwise) to the lender with a reverse mortgage during the life of the loan, the loan balance will actually increase over time, such that you are not only paying interest on the principal, but also on the accrued interest. In this sense, a reverse mortgage can be thought of as a kind of negatively amortizing mortgage.

When it comes to the issue of tax deductibility, things get a little hairy. Unlike a conventional mortgage, the accrued interest associated with a reverse mortgage is not tax-deductible on an annual basis. Thus, while you can write off all (in most cases) of the interest on your conventional mortgage when you file your taxes every April, you can’t include interest on your reverse mortgage.

Instead, reverse mortgage interest can only be deducted when the loan matures. According to the IRS, “Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable. Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full.” Thus, the IRS feels that since it has been kind enough not to tax you on the proceeds you receive under your reverse mortgage, borrowers then don’t have any grounds for complaint when it comes to not being able to deduct the interest.

If you drill even deeper, however, into the abyss that is the US tax code, you will learn that IRS treats reverse mortgage proceeds as home equity debt, rather than conventional mortgage debt. While this distinction might sound trivial, it actually has serious implications. That’s because the IRS limits the amount of tax-deductible home equity debt to $100,000. Interest on any proceeds that you receive(d) in excess of that threshold, cannot be deducted.

It gets even more complicated when you consider that reverse mortgages are ultimately repaid not by the borrower (assuming he has passed away when the loan “matures”), but by his heirs. This introduces estate tax issues into the equation. Unfortunately, this is beyond my personal expertise, and anyone who ultimately wishes to minimize the tax burden associated with the repayment of a reverse mortgage is encouraged to consult a tax specialist. A financial planner might also be able to make some suggestions about some of the products (insurance and otherwise) which are designed to similar ends.

Speculation is mounting that the Federal Reserve Bank will hike its benchmark federal funds rate (FFR) at some point in 2010. The rate has hovered around 0% for more than a year now, and analysts reckon that the remaining time it can possibly be held at this record low is running out. The question – as far as readers of this blog are concerned – is: How should this potential change be weighed when shopping for a reverse mortgage?

Let me first offer some background. For the purpose of this discussion, reverse mortgages can generally be categorized as either fixed-rate or variable-rate. Fixed-rate reverse mortgages accrue interest at the same (fixed) rate for their entire duration, whereas the rate associated with variable rate mortgages rises and falls in accordance with a stated benchmark rate, such as the FFR, 3-month LIBOR, and other obscure rate indexes that you’ve probably never heard of. In short, when the associated benchmark rate rises, so does the mortgage rate. [This is the exact same principle that governs conventional mortgages, by the way].

In this case, if/when the Fed hikes the Federal Funds Rate, all variable-rate mortgages (reverse and otherwise) linked to the FFR will all rise by a fixed increment. Technically, those mortgages that are linked to other benchmarks won’t rise, but given that most of the oft-quoted short-term rates are highly correlated and tend to move in tandem, it’s likely that a Fed rate hike would affect all variable-rate mortgages.

Trying to predict how fixed-rate mortgages would be affected by a short-term rate hike is difficult to say. That’s because fixed-rates are determined by market forces, and fluctuate irrespectively to short-term variable rates. In the past, short-term rate hikes have typically been accompanied by slight increases in long-term fixed rates, but this relationship is anything but certain.

The takeaway from all this is that while variable-rate reverse mortgages currently accrue interest at lower rates than their fixed-rate counterparts, it’s not clear whether this will be the case for long. Moreover, if the credit crisis has taught us anything, it is that the ability to refinance (from variable-rate into fixed-rate, for example), can no longer be taken for granted. That means it’s important to make the right choice from the outset.

In the current borrowing environment, the right choice s quickly tilting towards fixed-rate. While some borrowers might still be tempted by the low rates offered by variable-rate providers, be advised that they won’t remain low forever. And once they start rising, you might wish you had just gone with a fixed-rate, and saved yourself the headache.