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

A fixed-rate mortgage (FRM) is a type of home loan in which the interest rate remains the same over the life of the loan, regardless of changes in the market. This offers the security of knowing exactly what your payments will be each month, as the interest rate will not change. This is especially beneficial if interest rates rise, as your payments will stay the same. An adjustable-rate mortgage (ARM) is a type of home loan in which the interest rate can change over the life of the loan. ARMs usually offer a lower initial interest rate, as compared to an FRM. The interest rate is usually calculated based on a pre-set index, such as the Prime Rate or London Interbank Offered Rate (LIBOR). The index is usually tied to market conditions, so if the index rate increases, your payments will increase as well. It is important to be aware of the difference between fixed-rate and adjustable-rate mortgages when considering a home loan in New York. It is important to inform yourself of the details of each mortgage type before deciding which one is best for you. Be sure to carefully research and understand the terms and conditions of each mortgage option 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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