r home for 7+ years.
🔁 What is an Adjustable-Rate Mortgage (ARM)?
With an adjustable-rate mortgage, your interest rate starts lower, then adjusts periodically (usually after an initial fixed period like 5, 7, or 10 years).
Example: A 5/1 ARM
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Fixed rate for the first 5 years
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Then adjusts annually based on the market
✅ Pros:
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Lower initial interest rate = lower payments early on
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Could save money if you sell or refinance before the rate adjusts
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Often easier to qualify for
❌ Cons:
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Monthly payments can increase significantly
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Unpredictable long-term costs
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Riskier if you plan to stay in the home long-term
💡 Best for: Buyers planning to move, sell, or refinance within a few years — or expecting income to rise.
📊 Side-by-Side Comparison
| Feature | Fixed-Rate Mortgage | Adjustable-Rate Mortgage |
|---|---|---|
| Interest Rate | Stays the same | Starts low, then adjusts |
| Monthly Payments | Consistent | Can change (usually up) |
| Best For | Long-term buyers | Short-term or flexible buyers |
| Risk Level | Low | Medium to high |
| Initial Cost | Slightly higher | Lower starting payments |
🔍 Key Questions to Ask Yourself
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How long do I plan to live in this home?
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Can I handle a possible increase in monthly payments?
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Is today’s rate low enough to lock in for the long haul?
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Am I willing to refinance later if needed?
💬 Final Thoughts
There’s no one-size-fits-all answer. A fixed-rate mortgage offers long-term peace of mind. An ARM gives you flexibility and short-term savings — but with more risk.
Understanding your goals, timeline, and budget is the key to making the right choice.
