A fixed rate mortgage is a mortgage loan that has a fixed interest rate for the entire term of the loan. With this type of loan your interest rate and payments will be consistent throughout the duration of your loan. You’ll never have to worry about your interest rate increasing. Fixed rate mortgages are available in a variety of term lengths ranging from 10 years to 30 years.

An ARM may save you money on your loan, and might be a great option for someone who only plans on living in their home for a few years. ARMs are available in a variety of configurations and term lengths. The most common are 5/1, 7/1 and 10/1; the first number represents the number of years the interest rate on your mortgage will remain fixed. The second number represents how often the interest rate will change after the fixed rate period expires (in this case, it may adjust annually). Also referred to as the adjustment period. During the adjustment period your rate may increase or decrease which will make your monthly payments higher or lower.