Mortgage loans with long fixed rate periods usually have higher interest rates. However, in certain interest climates, the short term rate is at the same level as long term rates. In such economic conditions, there is little to no difference in interest rates between an Adjustable Rate Mortgage (ARM) and a Fixed Rate Mortgage )FRM).

Both fixed rate and ARM loans can be "interest only". Typically, the interest-only period on a 30-year fixed rate loan lasts 5 years. On adjustable-rate mortgages, the interest-only period typically coincides with the fixed-rate period (if the loan is a 2-year ARM, the interest-only period is usually 2 years as well).

Most homeowner sell or refinance their homes within 5 years, therefore obtaining a fixed rate may not always be the best option. When you are looking to buy a new home or refinance your existing mortgage sit down with your mortgage professional to find out all of the advantages and disadvantages to both a fixed rate home loan and an adjustable rate home loan for your individual situation. Adjustable rate mortgages, also referred to as ARM's, can be highly advantageous when used in the right situations. Remember to, that with an adjustable rate mortgage your rate can also go down depending on the market conditions at the time of the adjustment periods.