What is the difference between a fixed-rate and adjustable-rate mortgage?

A fixed-rate mortgage refers to a home loan where the interest rate remains constant throughout the entire loan term. This provides stability and predictability for borrowers as their monthly payments don't change. The interest rate is set at the time of loan origination and typically spans 15 to 30 years, making it suitable for long-term homeownership. On the other hand, an adjustable-rate mortgage (ARM) offers an initial fixed interest rate for a specific period, often 5, 7, or 10 years. After this period, the interest rate adjusts periodically based on market fluctuations. ARMs carry more risk as the rate can rise or fall, impacting monthly payments. Borrowers who plan to sell or refinance within a few years may benefit from the initial lower fixed rate, while others seeking long-term stability might opt for a fixed-rate mortgage.