Fixed vs. Adjustable Rate Mortgages: Which Is Right for You?

When it comes to choosing a mortgage, one of the biggest decisions you’ll make is whether to go with a fixed-rate or an adjustable-rate mortgage (ARM). Both options have advantages—your choice depends on your financial goals and lifestyle. Here’s a simple breakdown:

Fixed-Rate Mortgage

What It Is:
Your interest rate stays the same for the entire term of the loan.

Pros:

• Predictable Payments: Your monthly principal and interest never change.
• Long-Term Stability: Great if you plan to stay in your home for many years.
• Budget-Friendly: Easier to plan for the future without surprises.

Cons:

• Higher Initial Rate: Fixed rates are usually higher than ARM rates at the start.
• Less Flexibility: If rates drop significantly, you’d need to refinance to take advantage.
  

Adjustable-Rate Mortgage (ARM)

What It Is:
Your interest rate is fixed for an initial period (e.g., 5 or 7 years), then adjusts periodically based on market conditions.

Pros:

• Lower Initial Rate: Often starts lower than a fixed-rate mortgage, saving you money upfront.
• Short-Term Advantage: Ideal if you plan to move or refinance before the adjustment period.
• Potential Savings: If rates stay low, you could pay less over time.

Cons:

• Uncertainty: After the initial period, your rate can increase—sometimes significantly.
• Budget Risk: Payments may rise, making long-term planning harder.
  

Which Is Right for You?

• Staying Put for the Long Haul? A fixed-rate mortgage offers peace of mind.
• Planning to Move or Refinance Soon? An ARM might save you money upfront.
  

OceanAir Can Help You Decide
Every situation is unique. Our Home Loan experts will review your goals and help you choose the option that fits your life today—and tomorrow.

Ready to explore your options?
Visit https://oceanair.org/home-loan-overview/ or call 805-988-2151 ext. 8504 for a personalized consultation.