What's the difference between fixed-rate and adjustable-rate?

A fixed-rate mortgage locks in your interest rate for the entire life of the loan — 15, 20, or 30 years. Your principal and interest payment never changes, no matter what happens to rates in the broader economy. It's the simplest, safest, most predictable option, and it's what about 90% of my clients choose. An adjustable-rate mortgage (ARM) starts with a fixed period — usually 5, 7, or 10 years — at a rate that's typically 0.5-1% lower than the comparable fixed rate. After that initial period, the rate adjusts every 6-12 months based on a benchmark index plus a margin, with caps on how much it can move. ARMs make sense in two situations: you know you'll sell or refinance within the fixed period (military relocation, planned upgrade in 5-7 years), or rates are unusually high and you expect them to come down. For most buyers planning to stay long-term, the certainty of a fixed rate is worth the slightly higher starting payment.