What is the difference between a fixed rate and variable rate mortgage?
In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which typically is either 15 or 30 years. With a fixed-rate mortgage, you’ll always know what your payment will be. An adjustable rate mortgage, or “ARM,” typically has a lower interest rate and monthly payment initially, allowing for easier loan qualification and approval. But watch out: the rate and payment is subject to changing, up or down, depending on the terms of the mortgage. The adjustments, which have limits and can potentially change as frequently as every six months, are based on a financial index, such as the U.S. Treasury Securities index. Return to index . . .
