Choosing Between Fixed & Adjustable/Variable Rate Mortgages

Thinking about buying a home but stuck on the mortgage decision? You’re not alone. One of the most common questions homebuyers face is whether to lock in a fixed rate or roll the dice with an adjustable one. The truth is, there’s no one-size-fits-all answer—it all depends on your plans, your budget, and how much financial wiggle room you want. In this guide, we’ll help you weigh the pros and cons so you can choose the mortgage that fits your life, not just the market.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is exactly what it sounds like: a home loan program with an interest rate that stays the same for the entire term of the loan—typically 15, 20, or 30 years. That means your monthly principal and interest payments remain consistent, making it easier to budget over the long term. Fixed-rate mortgages are popular among buyers who plan to stay in their home for many years and prefer the peace of mind that comes with predictable payments, regardless of market fluctuations. 

What is an Adjustable/Variable Rate Mortgage (ARM)?

An adjustable-rate mortgage (ARM), sometimes called a variable-rate mortgage, features an interest rate that can fluctuate over time. It usually begins with a lower fixed rate for an initial period—commonly 3, 5, 7, or 10 years—providing short-term savings. After that, the rate adjusts at regular intervals based on changes in the market. This means your monthly payment could go up or down. ARMs may be a smart option for buyers who plan to move, sell, or refinance before the adjustment period kicks in, or for those comfortable with some risk in exchange for potentially lower upfront costs.

How to Choose What’s Best for You

Deciding between a fixed-rate and adjustable-rate mortgage comes down to your financial goals, risk tolerance, current interest rates, and how long you plan to stay in the home. If you value stability and want predictable monthly payments, a fixed-rate mortgage may be the safer choice. On the other hand, if you’re planning a shorter stay or expect your income to grow, an ARM could offer lower initial payments and potential savings. Consider your long-term plans, budget flexibility, and how comfortable you are with possible rate changes. 

Let Our Team Help You

Talking with a trusted lender or financial advisor can also help you align your mortgage choice with your overall financial strategy. Our experienced team of local lenders at Coastal Custom Mortgage has the knowledge you need to guide you towards a solution that works best for you. Contact us today to learn more!