Which is the better mortgage option for you: fixed or adjustable?

There are lots of ways to finance a home in today’s economy. For all mortgage applicants, though, it will eventually be time to decide whether to use a “fixed rate” or “adjustable-rate” mortgage. Each has its merits and drawbacks, and with a loan representative guiding you through the process, you’ll be in position to decide which loan type is best for you.

The low initial cost of adjustable-rate mortgages, or ARMs, can be tempting to homebuyers, yet they carry a degree of uncertainty. Fixed-rate mortgages offer rate and payment security, but they can be more expensive.

Here are some pros and cons of adjustable-rate and fixed-rate mortgages.

Adjustable-rate mortgage (ARM)


  • Feature lower rates and as a result, borrowers can buy larger homes than they otherwise could buy
  • Allows borrowers to take advantage of falling interest rates without refinancing.
  • Helps borrowers save and invest more money.
  • Offers a less expensive way for borrowers who don’t plan on living in one place for very long to buy a house.


  • Rates and payments can rise significantly over the life of the loan.
  • ARMs are difficult to understand and may not be the best choice for a first-time home buyer.
  • On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing.

Fixed-rate mortgage


  • Rates and payments remain constant, despite what happens in the broader economy.
  • Offers stability which makes budgeting easier. People can manage their money with more certainty because their housing payments don’t change.
  • Simple to understand, so they’re good for first-time buyers.


  • To take advantage of lower rates, fixed-rate mortgage holders have to refinance.
  • Can be too expensive for some borrowers because there is no early-on payment and rate break.
  • ARMs can be customized for individual borrowers, while most fixed-rate mortgages can’t.

Looking for more information? Contact us today.

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