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

A fixed-rate mortgage (FRM) is a mortgage loan with an interest rate that remains the same for the entirety of the loan. This means that the monthly payments on the loan remain the same amount each month, and the total cost of the loan can be calculated in advance. This makes it easy to budget and plan for your payments. An adjustable-rate mortgage (ARM) is a mortgage loan where the interest rate is adjustable and can change over the life of the loan. When the interest rate changes, your payments will also change. ARMs usually start off with a lower interest rate than FRMs, so they may be a good option if you plan to move or refinance your home in the near future. However, it can be more difficult to budget for a loan with an adjustable rate since payments will likely change each month. In New Mexico, state law requires lenders to provide specific information to borrowers who plan to take out an adjustable-rate mortgage, such as detailed descriptions of the provisions of the loan and a statement of the potential maximum interest rate. It is important to understand all the details of any loan before signing on the dotted line, so make sure to research all the options and ask plenty of questions before making a decision.

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

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