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.




1014 E Lake Avenue Tampa, Florida

3 Beds 2 Baths 1,200 SqFt 0.140 Acres

REPLACED SINCE 2022: ROOF ON HOME & SHED, A/C, UPDATED PRIMARY BATH AND WOOD SUPPORT UNDER CARPORT.  Located in an area of Rocky Point that is seeing a rejuvenation of Florida, ranch-style homes, this is your opportunity to update this property to fit your style.  Features include 2 Beds, 2 Baths, a sunroom, and a shaded backyard with two sheds for extra storage.  Minutes away from Rocky Point Golf Course, Skyway Park, and the Veterans Expressway for an easier commute, This home has received loving care through two generations and now it's your turn. Thank you for your interest and taking the time to see this property in person. $260,000 Active

4512 Bray Road Tampa, Florida

2 Beds 2 Baths 840 SqFt 0.150 Acres

3/2/2 FULLY-REMODELED HOME in BOATING COMMUNITY.  Gorgeous Remodeled Kitchen with Beautiful Quartz Counters; Solid-Wood Shaker Cabinets w/Soft-Close; Tray Ceiling; Pantry Closet w/Plantation-Style Doors; Premium Whirlpool Stainless Steel Refrigerator, Range, & Dishwasher; Modern, Sleek Range Hood.  Large Breakfast Bar for 4, PLUS Separate Dining Area next to kitchen!  True Open Floor Plan.  Very Large 21'x14' GREAT ROOOM with Gorgeous WOOD-BURNING FIREPLACE.  Luxurious, OVERSIZED 18'x12' MASTER BEDROOM with En Suite Bathroom; His & Hers Closets.   Remodeled Master Bathroom with Dual Sinks, Double Vanity, Gorgeous Marble Counter, & Built-In Shower Bench.  Both the 2ND and 3RD BEDROOMS are Spacious with plenty of Closet Space.  BONUS ROOM feels like a CABIN, with REAL WOOD Walls and an abundance of windows!  Convert Bonus Room to Office, Play Room, Flex Space, or 4th Bedroom!  Remodeled 2nd Bathroom with Granite Counter, Rectangular Sink, Bathtub for soaking, & GRANITE WALLS in Shower.  Premium Wood-Laminate Flooring throughout entire home.  This truly unique home has a lot of personality, with a tropical, relaxed feel.  This home is the 5th house from the water - behind the home is a *PRIVATE ACCESS ROAD* for you to take your boat or kayak to the water!  Community Boat Ramp and Fishing Pier are just steps away!  The Tropical Backyard is truly special and feels like your own private retreat, with Palm Trees, Interesting Landscaping, TWO LARGE PORCHES, & Fully-Fenced - perfect for parties or quiet family time.  Block Home w/Stucco.  Newer AC (2019).  New 50-Gallon Water Heater.  New 200-Amp Electric Panel.  New Garage Door.  Security System.  Vinyl Soffit.  Rain Gutters.  Utility Sink in Garage.  No Deed Restrictions.  Boat Parking OK.  RV Parking OK.  No HOA.  NO CDD.  Very Low Electric Bill (home has a lot of shade).  Located in the waterfront community of Tampa Shores, with plenty of million-dollar homes.  Publix, Target, Starbucks, and numerous restaurants are nearby.  Very close to the absolute best private schools in Tampa - West Gate Christian School; Berkeley Preparatory School.  Upper Tampa Bay Park is nearby with nature trails, bicycle paths, and children's playground.  15 minutes from Tampa International Airport.  Central location for Downtown Tampa, USF, Hillsborough Community College, and Raymond James Statidum.  Easy access to world-class beaches (Honeymoon Island; Clearwater Beach).  * Note that the Private Access Road behind the home belongs to the community, and you get your own key! $487,000 Active

10729 Drummond Road Tampa, Florida

3 Beds 2 Baths 1,764 SqFt 0.170 Acres

This one of a kind home is located on an cozy cul-de-sac with no through traffic in the highly desirable Tampa Palm community. It is nestled in The Enclave on a pie shape lot with a big back yard on over a 1/3 of an acre. This home features a new electrical LED lighting, new entire A/C duct work throughout the entire home, new wood flooring throughout, newer A/C system, newer roof 2010, new High quality Quartz counter tops, new high quality soft-close cabinets, new 5in. baseboards, new landscaping and more. Vaulted ceilings, and functional wood burning fireplace. The Master bedroom suite features Stand-alone shower, garden tub, double sinks, Custom Walk-In Closet. The exterior features 3 entries to back yard thru sliding glass doors, screened Porch with hot tub hookup. Tampa Palms is a highly sought-after community with top rated schools, shopping and restaurants, Moffitt Cancer Center, USF, James A Haley Veterans Hospital, Tampa Palms Country Club, tennis courts, basketball, park and much more! $485,000 Active

16104 Stowe Court Tampa, Florida

3 Beds 2 Baths 1,857 SqFt 0.380 Acres

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