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

Mortgage loans in Pennsylvania are available in either a fixed-rate or adjustable-rate option. A fixed-rate mortgage loan is one in which the interest rate remains fixed throughout the term of the loan, usually 15 or 30 years. The advantage of a fixed-rate is that the borrower is able to plan their financial budget with the security of knowing their mortgage payment will remain the same. An adjustable-rate mortgage loan, on the other hand, has an interest rate that can change over the life of the loan. The interest rate is usually lower than a fixed-rate but can change based on market conditions. The advantage of an adjustable-rate loan is that the borrower can enjoy a lower payment in the beginning of the loan term, but there is the risk that the payment could increase if interest rates rise. In summary, a fixed-rate mortgage has an interest rate that will remain the same over the life of the loan, while an adjustable-rate mortgage has an interest rate that can change over time. Fixed-rate loans generally have higher interest rates than adjustable-rate loans. However, they provide stability and the assurance that your payment will not increase. Adjustable-rate mortgages provide a lower interest rate initially, but they come with the risk of increasing payments.

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

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