Q. What is the difference between an adjustable and fixed rate mortgage?
A. An adjustable-rate mortgage has an interest rate (and monthly payment) that moves up and down depending on economic conditions. The fixed-rate mortgage has an interest rate (and monthly payment) that remains the same for the life of the loan.
Today, most adjustable-rate mortgages are hybrids that come with a low fixed interest rate that lasts for 1-2 years. After the fixed interest rate expires, the mortgage-rate becomes adjustable. Before you accept such a loan, make sure you can afford the final rate or you can refinance or resell once the rate becomes adjustable. Unfortunately, I know several people who have lost their homes to foreclosure because of their inability to afford their adjustable-rate loans.Educate yourself and secure a mortgage that gives you financial security.