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What is the difference between fixed-rate and adjustable-rate mortgages?

April 26, 2017adjustable-rate difference fixed-rate mortgages

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What is the difference between fixed-rate and adjustable-rate mortgages?

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A fixed-rate mortgage is a loan in which the principal and interest payments never change during the life of the loan. An adjustable-rate mortgage (ARM) is a mortgage loan subject to changes in interest rates. ARMs may be appealing to borrowers that do not plan to stay in their home for an extended period of time and those who do not qualify at higher fixed interest rates. ARMs typically permit borrowers to lower their initial payments if they are willing to assume the risk of interest rate changes.