What’s the difference between a fixed-rate mortgage and an ARM?
ARM stands for Adjustable Rate Mortgage. This means that the interest rate on the loan, like a South Carolina home mortgage, for instance, can be adjusted for a disclosed period of time. All ARMs should clearly denote the initial interest rate, the adjustment period, the index rate, and interest rate caps. An ARM may mean smaller payments at first, but borrowers run the risk of higher payments once the adjustments are complete. A fixed-rate mortgage, on the other hand, means that the interest rate doesn’t change. Payments are the same over the entire repayment schedule. Your rate it, in essence, “locked in” so long as you do not refinance.
