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Is a Fixed Rate Mortgage or ARM better?

How do I decide between a 7/1 ARM and a fixed rate mortgage?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

If you are confident that you are only going to own the property for six years then you should consider a 7/1 Adjustable Rate Mortgage (ARM). With a 7/1 ARM the interest rate is fixed and does not change for the first seven years of the mortgage which means your monthly payment is also fixed during this period. The interest during this initial seven year period is typically lower than the interest rate for a 30 year fixed rate mortgage which enables you to have a lower monthly payment and save money on your mortgage. At the start of year eight of a 7/1 ARM, however, the interest rate is subject to change on an annual basis and could increase which would cause your monthly mortgage payment to increase. If you sell the property before the end of year seven you would not need to worry about a potential increase in your interest rate and monthly payment. We provide a Comprehensive Overview of an Adjustable Rate Mortgage on FREEandCLEAR for you to review. Additionally, you can review lenders that offer Adjustable Rate Mortgages by clicking ARM INTEREST RATES We advise you to contact at least four lenders as comparing lenders is the best way to save money on your mortgage.

If you do not feel confident that you are going to sell the home within seven years then I recommend that get a 30 or 15 year fixed rate mortgage. The interest rate on a fixed rate mortgage is set and cannot change over the life of the mortgage which provides certainty that you monthly mortgage payment will not increase. You can compare fixed rate mortgage lenders in your area by clicking INTEREST RATES

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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