A fixed rate mortgage is a set interest rate that remains unchanged throughout the life of the loan. The principal and interest payment will be the same month to month.

An Adjustable Rate Mortgage is variable interest rate that usually starts at a lower interest rate than a fixed interest rate loan for a certain amount of time, typically either 3, 5, 7 or 10 years. The initial rate will stay the same for a set period of time but then will adjust based on a pre-arranged amount.

Over time, the ARM interest paid can and likely will surpass a fixed rate but if properly planned, an ARM loan can be a perfect solution for someone who knows they are only going to keep their home for a set amount of time.

Before making up your mind on which option is best for you, we recommend reviewing both options in detail as one is not always better than the other.