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What is the difference between a fixed rate mortgage and adjustable rate mortgage?

April 26, 2017adjustable rate mortgage fixed rate mortgage

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What is the difference between a fixed rate mortgage and adjustable rate mortgage?

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With a fixed rate mortgage, the interest rate never varies and your monthly payment stays the same for the life of the loan (excluding increases due to rises in real estate taxes). With an adjustable rate mortgage (or ARM), you usually start out with a lower interest rate than on a fixed rate mortgage, but the interest rates go up (or down) after a period of time and consequently affect the amount of your monthly payment.