Question 1

Is a fixed-rate mortgage always better than an ARM?

Accepted Answer

Not necessarily. A fixed-rate mortgage offers stability and predictability, which is ideal for buyers planning to stay long-term. An ARM can offer a lower initial rate, which may be advantageous if you plan to sell or refinance before the adjustment period begins. The right choice depends on your timeline and risk tolerance.

Question 2

How does an adjustable-rate mortgage work after the fixed period?

Accepted Answer

After the initial fixed period (e.g., 5 years on a 5/1 ARM), the rate adjusts annually based on a benchmark index plus a margin. Rate caps limit how much the rate can change per adjustment and over the life of the loan. Your lender will disclose the specific caps and index used.

Question 3

What is a 5/1 ARM?

Accepted Answer

A 5/1 ARM has a fixed interest rate for the first 5 years, then adjusts once per year for the remaining loan term. The "5" refers to the initial fixed period and the "1" refers to how often the rate adjusts after that. Other common structures include 7/1 and 10/1 ARMs.

Question 4

Can I refinance from an ARM to a fixed-rate loan?

Accepted Answer

Yes. Many borrowers refinance from an ARM to a fixed-rate mortgage before the adjustment period begins, especially if they want to lock in a rate for the long term. Whether refinancing makes sense depends on current rates, your remaining loan balance, and how long you plan to stay in the home.

Question 5

Which is better for a first-time homebuyer — fixed or ARM?

Accepted Answer

Most first-time homebuyers choose a fixed-rate mortgage for the payment predictability and peace of mind. However, if you're confident you'll sell or refinance within 5–7 years, an ARM's lower initial rate could save money. Discuss your plans with Patron Mortgage to determine the best fit.

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage (ARM)
Interest Rate	Locked for the life of the loan	Fixed for initial period, then adjusts periodically
Monthly Payment	Predictable — never changes	Can increase or decrease after initial period
Initial Rate	Typically higher than ARM initial rate	Often lower than fixed rate initially
Common Terms	10, 15, 20, or 30 years	5/1, 7/1, 10/1 ARM (fixed period / adjustment interval)
Rate Caps	N/A — rate never changes	Periodic and lifetime caps limit how much rate can rise
Best For	Long-term homeowners, rate stability	Short-term owners, buyers expecting to sell or refinance
Risk Level	Low — no rate uncertainty	Moderate — rate may rise after fixed period
Refinancing Need	Rarely needed for rate reasons	Often refinanced before adjustment period begins

Fixed-Rate vs Adjustable-Rate Mortgage

Side-by-Side Comparison

When to Choose Each

Choose Fixed-Rate If…

Choose ARM If…

Frequently Asked Questions

More Loan Comparisons

Not Sure Which Rate Type Is Right?