Can someone explain the hidden risks of taking a variable v. Fixed cost loan for ~90K my first year?

Not informed enough about this, but if my variable 5 yr rate is 2% less than fixed, why would in not take that and then refinance for a longer term in 1-2 yrs? Am I missing something?

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The risk is that the fed finally wakes up in the next two years and increases rates massively. Not only would your variable rate increase for the two years, when you refi, fixed rates will be much higher than they are now.

Tbh, the fed seems pretty dead set on not raising rates, so you’re probably fine, but runaway inflation would eventually force their hand.

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Whilst the variable rate is lower than fixed rates today, it isn’t as certain if a future loan will be as low as today’s fixed rates.

How long do you want to do the loan in total?

Today’s rates are very good. And ‘if’ there is inflation beyond what the fed expects, then hopefully you can also find another job with higher paying income to help offset (easier to justify in interviews) whilst your mortgage costs would remain the same.

You can try and time the market with what you’ve said or you can take the risk off entirely and just lock the rate in today.

Good luck.

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