Educational Content: This page is for informational purposes only and does not constitute financial advice. Always consult a qualified mortgage professional before making loan decisions.
Fixed vs Adjustable-Rate Mortgage
Understand the key differences between fixed and ARM mortgages to choose the right loan for your situation
Fixed-Rate Mortgage
Your interest rate stays the same for the entire life of the loan — 15, 20, or 30 years. Your principal and interest payment never changes.
- ✓ Predictable monthly payments
- ✓ Protection from rising rates
- ✓ Easier to budget long-term
- ✗ Higher initial rate than ARM
- ✗ Less benefit if rates fall
Best for: Buyers planning to stay long-term or those who value payment stability.
Adjustable-Rate Mortgage (ARM)
Your rate is fixed for an initial period (e.g., 5 or 7 years), then adjusts periodically based on a market index.
- ✓ Lower initial interest rate
- ✓ Lower payments in early years
- ✓ Beneficial if you sell or refinance early
- ✗ Rate can rise after fixed period
- ✗ Payment uncertainty long-term
Best for: Buyers who plan to sell or refinance within the initial fixed period.
Common ARM Structures
| ARM Type | Fixed Period | Adjusts Every | Good If You Plan To... |
|---|---|---|---|
| 5/1 ARM | 5 years | 1 year | Sell or refinance within 5 years |
| 7/1 ARM | 7 years | 1 year | Move within 7 years |
| 10/1 ARM | 10 years | 1 year | Have a 10-year horizon |
Compare current fixed and ARM rates from Massachusetts credit unions
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