ARM vs. Fixed-Rate: Which is Right for You?
The main difference between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage is how the interest rate behaves over the life of the loan.
A **fixed-rate mortgage** locks in your interest rate for the entire term (e.g., 15 or 30 years), offering stability and predictable monthly payments.
An **adjustable-rate mortgage (ARM)** typically starts with a lower "teaser" rate for a set period (like 5, 7, or 10 years). After that, the rate can adjust periodically based on market indexes, meaning your payments could go up or down.
When to Choose an ARM
An ARM might be a good choice if you plan to sell or refinance before the initial fixed period ends, or if you expect your income to rise significantly in the future to cover potential payment increases.