Why an ARM Loan Can Be the Smarter Move When Rates Are High

A lot of buyers hesitate when they see today’s mortgage rates. The thought of locking in a high 30-year fixed rate doesn’t sound appealing — and it shouldn’t. The good news is you don’t have to.

Adjustable-Rate Mortgages (ARMs) are designed for times like this. They start at a lower rate than a 30-year fixed loan and stay locked for a set period — usually 5, 7, or 10 years. During that time, your rate and monthly payment stay the same, giving you predictable costs and often significant savings compared to a fixed loan.

ARMs Are Still 30-Year Loans
An ARM doesn’t mean you’re getting a short-term loan. The overall term is still 30 years — only the initial interest rate is fixed for a certain period before it can adjust. Here’s how it works:

• 5/1 ARM: Fixed rate for the first 5 years, then adjusts every 1 year after

• 7/1 ARM: Fixed rate for the first 7 years, then adjusts every 1 year after

• 10/1 ARM: Fixed rate for the first 10 years, then adjusts every 1 year after

That initial fixed period is what gives you the benefit — a lower starting rate and monthly payment — while still allowing you to refinance before the adjustable period begins.

Why This Matters

• You’re not stuck with today’s rates forever. You can refinance into a 30-year fixed loan once rates come down. Many buyers use ARMs as a bridge until the market shifts.

• You save money upfront. A lower starting rate means lower monthly payments during the years you’re most likely to live in or pay down the home.

• You gain flexibility. Most homeowners move or refinance long before 30 years anyway, so it doesn’t make sense to pay a premium for a rate you might never need.