Fixed-Rate Mortgage

• A fixed-rate mortgage is a mortgage with a fixed interest rate. Your interest rate will not change as long as you maintain your current mortgage contract without refinancing. Your mortgage payment may change in the future if you have escrow because of increases in property taxes or insurance rates, but the rate remains fixed.
  
  

Adjustable Rate Mortgage

• An ARM is an adjustable rate mortgage. The interest rate in an ARM is not static and will change periodically over the life of the loan, which causes the monthly mortgage payment to change.
  
  

Hybrid ARMs

• Certain ARMs have a fixed interest rate for a set time period before the rate becomes adjustable. These types of ARMs are called hybrid ARMs. A hybrid ARM may have a fixed interest rate for five years and then switch to an adjustable rate for the remainder of the loan term.
  
  

Seven-Year ARM

• A seven-year ARM is a hybrid ARM with a fixed interest rate for the first seven years of the loan. The ARM may also be called a 7/1 ARM. If you have a seven-year ARM, your interest rate will be fixed for seven years. After the seven-year period, the rate will adjust according to market indices.