What's the difference between a Fixed Rate Mortgage and an Adjustable Rate Mortgage?

A fixed-rate mortgage has an interest rate and payment that stays the same for the life of the mortgage. An adjustable-rate mortgage ("ARM") starts with a lower-than-market fixed rate for a set period (e.g. 3, 5, 7 years) before the rate adjusts up or down based on market conditions at that time, potentially changing your payment.

Fixed-rate mortgages offer peace of mind, while ARMs can provide lower initial costs but carry the risk of future payment increases.