Fixed Rate Mortgages
With a fixed rate mortgage, your interest rate and payments will be consistent throughout the duration of your loan. You won’t have to worry about your rate increasing alongside market rates. Fixed rate mortgages are available in a variety of term lengths ranging from 15 years to 30 years.
Adjustable Rate Mortgages (ARM)
An ARM can save you money on your loan, especially if you’ll be living in the home for only a few years. ARMs are available in a variety of configurations and term lengths, with the most common being 3/1, 5/1, and 7/1. Let's use a 3/1 ARM to illustrate what the number mean, the first number "3" represents the number of years your interest rate will remain fixed. The second number “1” represents how often your interest rate will change after the fixed rate period expires (in this case, every year). This is called the adjustment period. Rates may increase or decrease only during adjustment periods which can make your monthly payments higher or lower respectively.