The Differences Between Fixed-Rate and Adjustable-Rate Mortgages

The Differences Between Fixed Rate and Adjustable Rate Mortgages

One of the most significant decisions you’ll make is choosing between a fixed-rate and an adjustable-rate mortgage. Both have their pros and cons, and understanding these can make your home-buying journey smoother.

The Differences Between Fixed-Rate and Adjustable-Rate Mortgages

Stepping into the world of homeownership means making choices, and one of the most crucial is the type of mortgage you’ll get. This guide covers:

  • What is a fixed-rate mortgage?
  • What is an adjustable-rate mortgage?
  • Pros and cons of fixed-rate mortgages
  • Pros and cons of adjustable-rate mortgages
  • Which one is right for you?

Here’s a closer look at each.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage has an interest rate that remains unchanged for the life of the loan. Whether it’s a 15-year or a 30-year mortgage, your interest rate will stay the same, making your monthly payments predictable.

What is an Adjustable-Rate Mortgage?

An adjustable-rate mortgage (ARM) has an interest rate that can change periodically. The rate is typically fixed for an initial period, after which it can adjust based on market conditions. This means your monthly payment can go up or down.

Pros and Cons of Fixed-Rate Mortgages


  • Predictability: Your monthly payments remain the same, making budgeting easier.
  • Long-term savings: If you secure a low rate, you’ll save money over the life of the loan compared to an ARM that increases.
  • Simplicity: No need to worry about market conditions affecting your rate.


  • Higher initial rates: Fixed-rate mortgages often start with a higher rate than ARMs.
  • Less flexibility: If market rates drop, you won’t benefit unless you refinance.

Pros and Cons of Adjustable-Rate Mortgages


  • Lower initial rates: ARMs often start with lower rates than fixed-rate mortgages.
  • Potential for savings: If market rates decrease, your rate might drop as well.


  • Uncertainty: Your payments can increase, sometimes significantly, if market rates rise.
  • Complexity: ARMs come with terms and conditions that can be confusing, like caps on how much the rate can increase.

Which One is Right for You?

Choosing between a fixed-rate and an adjustable-rate mortgage depends on your financial situation and risk tolerance. If you value stability and plan to stay in your home long-term, a fixed-rate might be best. If you’re comfortable with some risk and plan to move or refinance in a few years, an ARM might be more suitable.

FAQ About Fixed-Rate and Adjustable-Rate Mortgages

Here are some frequently asked questions about fixed-rate and adjustable-rate mortgages. If you don’t see the answers you’re looking for here, please call our office. We’re here to help.

How Do I Know if Fixed-Rate is Right for Me?

If you plan to stay in your home for a long time and want predictable monthly payments, a fixed-rate mortgage might be a good fit.

Can the Rate on an ARM Go Down?

Yes, if market interest rates decrease, the rate on an ARM can go down, but it can also go up if market rates rise.

Are There Limits to How Much an ARM Rate Can Increase?

Most ARMs have caps that limit how much the interest rate can increase in a given period and over the life of the loan.

Is Refinancing an Option if Market Rates Drop?

Yes, if you have a fixed-rate mortgage and market rates drop, you can consider refinancing to take advantage of the lower rates.

How Often Do ARM Rates Adjust?

It varies. Some ARMs adjust annually, while others might adjust more frequently. The terms will be specified in your loan agreement.

Choosing the right mortgage type is a significant decision in your home-buying journey in Tampa Bay. By understanding the differences between fixed-rate and adjustable-rate mortgages, you’ll be better equipped to make a choice that aligns with your financial goals and comfort level.



Welcome to this charming bungalow just 5 minutes to Lowry Park Zoo, 10 minutes to downtown Tampa and 15 minutes from the airport! You'll want to spend all of your mornings on the inviting front porch under the shade of the oak tree. As you walk in, you'll fall in love with the abundance of natural light in the spacious living area. The home features a split floorplan for the two bedrooms, perfect for privacy. The kitchen was tastefully updated with granite counters, wooden shaker cabinets, and stainless steel appliances. Additional features include an indoor laundry, large fenced in backyard, and laminate flooring throughout! Schedule your showing today! $260,000 Active

8506 N Branch Avenue Tampa, Florida

2 Beds 1 Baths 716 SqFt 0.110 Acres

Priced to sell immediately! Peaceful and quiet block 3 bedroom / 2 bath home with a spacious screened-in patio and outdoor grill area overlooking a huge 34' x 16-3/4' pool, perfect for entertaining or just relaxing! Your privacy is ensured via a 6’ tall block wall surrounding the back yard. The front yard features a large driveway leading up to a 2-car garage, connected to both the interior of the home, as well as the rear patio. New laminate flooring 2023. New interior paint 2024. Re-roofed in 2016. Double pane windows and sliding glass doors. Professionally pest controlled. Plumbing repiped from galvanized to PVC. Pool re-marcited in 2013. New electrical panel 2023.Hurricane shutters included. No HOA. Not in a flood zone. Please ask your agent to set up a showing today! Outdoor furniture and stone garden ornaments do not convey. $395,000 Active

11718 Fife Avenue Tampa, Florida

3 Beds 2 Baths 1,297 SqFt 0.220 Acres

This charming one story 1920s bungalow is located in Hyde Park just steps from Bayshore Boulevard and walking distance to Hyde Park Village. The home is adorned with beautiful original hardwood flooring throughout and custom finishes. This  home features 3 bedrooms, 2 baths and an office/den. Natural light fills the living room, accentuating the charm and character of hand crafted built-ins and original fireplace. The adjoining office/den is lined wall to wall in windows and boasts original glass french doors. The kitchen enchants with three large windows overlooking the french garden and fountain. The design and detail in the kitchen is perfect for even the most experienced chef or casual cook with all new appliances, two dishwasher drawers, gas stove, custom cabinetry, and a large island. The master bedroom is reimagined with ensuite bathroom, double vanity, walk in closet, and large walk in shower.  Outside you’ll enjoy a screened porch and covered patio – great for relaxing while staying cool and covered, front porch and 1 car garage with alley access. Other updates include new A/C, roof 2015, new plumbing to the street, exterior and interior paint, custom tall wood privacy fence, landscaping, and city approval for a pool. A short distance to shopping, dining, entertainment and outdoor festivals and markets; you won't want to miss this remarkable home. $1,500,000 Active

1715 W Hills Avenue Tampa, Florida

3 Beds 2 Baths 1,904 SqFt 0.170 Acres

Are You Buying or Selling a Home in Tampa Bay?

You can use this website to search homes for sale in Tampa Bay and all its communities. Our site is directly connected to the Tampa Bay MLS, and we update our listings every hour. You can even use our site to create your own account and get emails as soon as a new home hits the market, price change alerts and so much more.

While you’re here, check out these listings:

Join our team

Please fill out the below form completely and include your resume & cover letter and we will get back to you quickly!

  • Drop files here or
    Max. file size: 50 MB.