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

The difference between fixed-rate and adjustable-rate mortgages is how the interest rate on the loan is determined. With a fixed-rate mortgage, the interest rate is set at the time of the mortgage and does not change over the life of the loan. This type of loan is ideal for those who want to keep their monthly payments the same, since the interest rate will remain the same. An adjustable-rate mortgage, or ARM, is a loan that has an interest rate that can change over time. The initial interest rate is set at the time of the mortgage, but then can fluctuate through the life of the loan in response to market conditions. These loans are usually attractive to borrowers who want to take advantage of lower interest rates when they become available. In North Carolina, both fixed-rate and adjustable-rate mortgages are available and they are regulated by state and federal laws. Borrowers in this state should be aware that these loans have different risks and should be sure to understand all the terms of the loan before signing any paperwork.

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