Believe it or not, the hottest new product in the mortgage market these days is a FIXED rate mortgage! With interest rates rising and people taking out a new mortgage, many holders of adjustable rates are suddenly demanding the predictability of a fixed rate.

If you are thinking of refinancing to a fixed mortgage, read your mortgage agreement before you do anything. Many adjustable rate loans, home equity loans and lines of credit were written with prepayment penalties attached if the loans are closed out within the first 3 years.

Typically, you can expect to pay a penalty equal to six months of interest if you make a switch. This might make sense if you plan on staying in the home for awhile.

If you can't predict how long you plan on being there, and have some cash available, try paying down the loan to mitigate a reset to higher monthly payments. Most prepayment mortgages allow as much as a 20% prepayment without charging you a penalty.

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