Fixed-Rate vs. Adjustable-Rate Mortgages: Which Is Right for You?
Buying a home is one of the biggest financial decisions you’ll ever make — and choosing the right type of mortgage can make a huge difference in how much you pay over time. At 806 Mortgage, we help homebuyers across Lubbock and West Texas find the best loan for their goals and budget.
One of the first decisions you’ll face is whether to go with a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Both have their advantages, depending on your financial situation and how long you plan to stay in your home.
Let’s break it down.
What Is a Fixed-Rate Mortgage?
A fixed-rate mortgage keeps the same interest rate for the entire life of the loan — typically 15, 20, or 30 years. That means your monthly principal and interest payments never change, even if market rates go up.
Pros:
Predictable payments: You always know what to expect each month.
Protection from rate increases: If rates rise in the future, your payment stays the same.
Great for long-term homeowners: Perfect if you plan to stay in your home for many years.
Cons:
Higher initial rate: Fixed rates usually start higher than adjustable ones.
Less flexibility: If rates drop significantly, you’d need to refinance to take advantage.
Best for: Homebuyers who value stability and plan to stay put for the long haul.
What Is an Adjustable-Rate Mortgage (ARM)?
An adjustable-rate mortgage starts with a lower, fixed interest rate for a set period (often 5, 7, or 10 years), then adjusts periodically based on market conditions.
For example, a 5/1 ARM means your rate is fixed for the first 5 years and can adjust once a year after that.
Pros:
Lower initial rate: You’ll typically start with a smaller monthly payment.
Good for short-term homeowners: Ideal if you plan to sell or refinance before the rate adjusts.
Potential savings: If rates drop, your payment could decrease (though that’s not guaranteed).
Cons:
Uncertain future payments: Your rate could rise, increasing your monthly payment.
More complex: ARMs have caps, indexes, and margins that can be confusing without expert guidance.
Best for: Buyers who expect to move within a few years or are comfortable with some risk.
The Bottom Line
There’s no one-size-fits-all answer when it comes to choosing a mortgage.
If you value stability and predictability, a fixed-rate mortgage is probably the safer bet.
If you want to save money upfront and plan to move or refinance soon, an ARM might make more sense.
Not sure which is right for you? That’s where we come in.
Contact 806 Mortgage today for a free, no-pressure mortgage consultation. We’ll compare rates, explain your options in plain English, and help you make a confident decision about your new home in Lubbock or anywhere in West Texas.
