The difference between an ARM and a fixed rate mortgage is essentially a question of the mortgage rate. An adjustable rate mortgage is usually beneficial because the interest rate is lower than a fixed rate mortgage. The rate is often lower because the bank/lender adjusts the interest rate as national interest rates changes (also known as prime lending), which will change your payment. This rate may be up to even a whole percentage lower than a fixed.
A brief on prime lending: prime lending is the rate of interest that a lender would give to it's best possible client...this relative standard is the basis on which lending across the country is established.
A fixed rate mortgage on the other hand is advantageous as it sets the rate a little higher (than an ARM), but this rate is locked-in despite where the interests may go. When interest rates are low, a good fixed rate is usually the best way to go, especially if interest rates go up in the near future.
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