Mortgage Basics: Information for First Time Home Buyers

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

A fixed rate mortgage is an interest rate which remains the same for the life of the loan (usually 15 to 30 years), resulting in a monthly payment which remains constant. An adjustable rate mortgage, on the other hand, is a mortgage rate which is recalculated every 1, 6, or 12 months, depending on the terms of the note. This means that your interest rate and monthly payments will fluctuate based on the current index that the rate is tied to such as the 12 month Treasury Index.