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What is the difference between a fixed-rate and an ARM mortgage?

April 26, 2017arm fixed-rate mortgage

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What is the difference between a fixed-rate and an ARM mortgage?

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A fixed-rate mortgage offers an interest rate that is steady throughout the life of the loan. Fixed-rate mortgages offer the security of always knowing exactly what your monthly payment will be. An Adjustable Rate Mortgage (ARM) offers an opportunity to save on interest costs. The interest rate on ARMs can fluctuate (up or down) periodically. However, you are protected from rates getting too high, because ARMs have annual and lifetime rate caps, which limit how high your rate may go.