What is the difference between a fixed-rate and an adjustable-rate mortgage?
What is the difference between a fixed-rate and an adjustable-rate mortgage?
A fixed-rate mortgage maintains the same interest rate and monthly payment throughout the loan term, offering predictability. An adjustable-rate mortgage (ARM), however, starts with a lower initial rate that changes periodically based on market conditions. While ARMs can save money initially, they carry the risk of increased payments over time, making them ideal for buyers planning to sell or refinance before rates adjust.
