An Adjustable Rate Mortgage (ARM) is where the interest rate fluctuates during the life of the loan. The borrower benefits if interest rates fall, but loses out if interest rates rise.
A Fixed Rate Mortgage, unlike an ARM, has a steady interest rate for the entire life of the loan, usually 30 years. This type of rate is perfect for those who like to budget their monthly expenses and who plan to keep their home for a number of years.
There are advantages and disadvantages to each type of loan, so it’s best to discuss your personal financial situation with your mortgage lender and get his/her advice about which is best for you.