Short Answer
A fixed-rate mortgage keeps the same interest rate for the entire loan term, typically 15 or 30 years, giving you predictable monthly payments. An adjustable-rate mortgage (ARM) has a fixed rate for an initial period (typically 5, 7, or 10 years), then adjusts periodically based on market rates. ARMs usually start with a lower rate but carry the risk of future increases.
Fixed-rate mortgages are the most common choice because they offer stability and predictability. Your interest rate and monthly payment never change, making it easier to budget. The tradeoff is that fixed rates are typically higher than the initial ARM rate. Adjustable-rate mortgages offer lower initial rates, which can save you money in the early years of the loan. If you plan to sell or refinance before the adjustment period begins, an ARM can be a smart financial move. However, if rates rise significantly when the adjustment period hits, your monthly payment could increase substantially. Most ARMs have caps that limit how much the rate can increase per adjustment and over the life of the loan. In the current rate environment, many buyers are choosing fixed-rate loans for long-term security, but ARMs still make sense for the right buyer.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
Choosing between fixed and adjustable depends on your plans. If you plan to stay in the home for 10 years or more, a fixed rate gives you peace of mind. If you expect to move or refinance within 5 to 7 years, an ARM could save you money. I am not a lender, but I work with trusted mortgage professionals who can explain the tradeoffs and help you choose the right option. Let me connect you with someone who can run the numbers for your specific situation.
Related Questions
Ready to Take the Next Step?
Every situation is unique. Let us talk about your specific goals and create a plan that works for you.