Rate Type

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Rate types refer to the two basic types of interest structures: fixed-rate mortgages or adjustable-rate mortgages. A fixed-rate mortgage will have the same interest rate throughout the lifetime of the loan and the same monthly payments unless third-party fees fluctuate. Whereas an adjustable-rate mortgage will have the same interest rate depending upon its annotations. For example, a 7/1 ARM will have the same interest rate for the first seven years, then adjust according to the index and margin.