When you’re buying a home, choosing the right mortgage can save you thousands of dollars over time. One of the most important decisions you’ll make is whether to go with a fixed-rate mortgage or an adjustable-rate mortgage (ARM).
Let’s break it down in simple terms.
What Is a Fixed-Rate Mortgage?
A fixed-rate mortgage means your interest rate stays the same for the life of the loan — whether it’s 15, 20, or 30 years.
✅ Pros:
Your monthly payment never changes
Easier to budget long-term
Great for people staying in their home for 10+ years
⚠️ Cons:
May start with a higher interest rate than an ARM
Less flexibility if interest rates fall
What Is an Adjustable-Rate Mortgage (ARM)?
An adjustable-rate mortgage starts with a lower rate for the first few years (usually 5, 7, or 10 years), then adjusts every year based on the market.
For example, a 5/1 ARM means you get a fixed rate for 5 years, then the rate adjusts once a year.
✅ Pros:
Lower initial monthly payments
Can save money if you plan to sell or refinance before the rate adjusts
Good option if interest rates are expected to drop
⚠️ Cons:
Your rate (and payment) can go up — sometimes a lot
Harder to plan long-term
May cost more if you stay in the home too long
Which One Saves You More?
It depends on your plans:
| If You Plan To… | Best Option |
|---|---|
| Stay in the home long-term (10+ years) | ✅ Fixed-rate |
| Sell or refinance in 5–7 years | ✅ Adjustable-rate (ARM) |
| Want predictable payments | ✅ Fixed-rate |
| Can take a risk for lower initial cost | ✅ ARM |
Final Thoughts
There’s no one-size-fits-all answer. The best mortgage for you depends on:
How long you plan to stay in the home
Your risk tolerance
What you can afford now vs later
🗣 Tip: Talk to a mortgage advisor and ask them to run numbers for both options side-by-side.
