Loan Basics
Fixed vs. adjustable rate: which is right for you?
A fixed rate never changes; an adjustable rate can move after a few years. Which one fits depends on how long you'll keep the loan.
One of the first choices you'll make on a mortgage is fixed versus adjustable. It sounds technical, but the decision really comes down to one question: how long do you expect to keep this loan?
How each one works
A fixed-rate mortgage locks your interest rate for the life of the loan — 30 years, 15 years, whatever term you choose. Your principal-and-interest payment never changes, which makes budgeting simple and predictable.
An adjustable-rate mortgage (ARM) starts with a fixed period — often 5, 7, or 10 years — then adjusts periodically based on the market. The starting rate is usually lower than a comparable fixed rate, but it can rise (or fall) once the fixed period ends.
When an ARM can make sense
If you're confident you'll sell or refinance before the fixed period ends — say, a starter home you'll outgrow in five years — an ARM's lower initial rate can save you real money. If you plan to stay put for the long haul and want certainty, a fixed rate is usually the safer bet.
There's no universally 'better' option — only the one that fits your timeline and your tolerance for change. A quick conversation with a loan officer can map each scenario to an actual payment so you can compare side by side.