One of the most important decisions you’ll face when getting a mortgage is choosing between a fixed-rate mortgage (FRM) and an adjustable-rate mortgage (ARM). Each offers unique advantages depending on your financial goals, risk tolerance, and how long you plan to stay in your home.

Fixed-Rate Mortgages: Consistency You Can Count On

What It Is:
A fixed-rate mortgage locks in your interest rate for the entire life of the loan, resulting in stable monthly payments.

Pros:

• Predictable payments for easier budgeting

• Protection against rising interest rates

• Ideal for long-term homeowners

Cons:

• Higher initial rates compared to ARMs

• Less flexible if market rates drop unless you refinance

Best For: Buyers who plan to stay in their home for many years and want payment stability.

Check your mortgage eligibility (as of Sep 8, 2024)

Adjustable-Rate Mortgages (ARMs): Flexibility and Lower Initial Costs

What It Is:
An ARM starts with a low fixed interest rate for a set period (e.g., 5, 7, or 10 years), after which the rate adjusts periodically based on market conditions.

Pros:

• Lower initial interest rate than fixed loans

• Potential to save money in the short term

• Good fit for buyers planning to sell or refinance before the adjustment period

Cons:

• Payments can increase significantly after the fixed period

• Unpredictable future costs depending on interest rate trends

Best For: Short-term homeowners or investors comfortable with rate fluctuations.

See today’s rates (Sep 8, 2024)

How to Choose the Right Mortgage Type

Consider Your Timeline:
If you expect to stay in your home for more than 7–10 years, a fixed-rate mortgage provides long-term security. If you’re planning to move or refinance sooner, an ARM could offer upfront savings.

Evaluate Current Market Conditions:
Interest rates are influenced by economic trends. If rates are low, locking in a fixed-rate could be wise. If rates are high, an ARM might offer temporary relief until the market shifts.

Know Your Risk Tolerance:
If you’re uncomfortable with the possibility of rising payments, a fixed-rate option offers peace of mind. ARMs require more flexibility and financial preparedness.

Final Thoughts

The decision between a fixed-rate and adjustable-rate mortgage ultimately comes down to your financial strategy, how long you plan to stay in the home, and how much risk you’re comfortable taking.

No matter your choice, working with a trusted mortgage advisor can help you make the most informed decision possible.

Ready to explore your options? Contact us or call 561-300-0380 today.

Show me today’s rates (Sep 8, 2024)