Fixed-rate mortgages and adjustable-rate mortgages (ARMs) are the two primary mortgage types.
While the marketplace offers numerous varieties within these two categories, the first step when shopping for a mortgage is determining which of the two main loan types best suits your needs.
A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan.
The initial interest rate on an adjustable-rate mortgage (ARM) is set below the market rate on a comparable fixed-rate loan, and then the rate rises (or possibly lowers) as time goes on.
ARMs are typically more complicated than fixed-rate mortgages.