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

1 answer

RJRyan J. Speltz · Mortgage Broker/OwnerAug 6, 20260
The simple answer is that an adjustable rate mortgage has a fixed period and a variable period while a fixed rate doesn't have the variable component to it. For example, many ARMS are 7/1. 7 years of fixed, and then variable adjusted every 1 year after that. If the ARM does not have a fixed period, then it is variable every month, re-assessed based on an index. (LIBOR/SOFR/etc.) A fixed rate mortgage is fixed for the duration of the loan. (10 years, 15 years, 20 years, etc)

RJRyan J. Speltz · Mortgage Broker/OwnerAug 6, 20260
The simple answer is that an adjustable rate mortgage has a fixed period and a variable period while a fixed rate doesn't have the variable component to it. For example, many ARMS are 7/1. 7 years of fixed, and then variable adjusted every 1 year after that. If the ARM does not have a fixed period, then it is variable every month, re-assessed based on an index. (LIBOR/SOFR/etc.) A fixed rate mortgage is fixed for the duration of the loan. (10 years, 15 years, 20 years, etc)