Real Estate
Fixed vs. ARM Mortgage
Is the introductory rate on an ARM worth the long-term risk? Compare the true cost based on when you plan to sell or refinance.
Years until you sell the house or refinance.
30-Year Fixed Mortgage
Adjustable Rate (ARM)
What will the rate jump to when it adjusts?
The Winner (Over 7 Years)
5/1 ARM
Saves you $13,213 if you sell or refinance in 7 years.
Head-to-Head Breakdown
Fixed Rate (6.5%)
Monthly Payment
$2,528
For all 30 years
Total Cash Paid In
-$212,375
Loan Balance Remaining
-$361,665
5/1 ARM
Intro Payment (Yrs 1-5)
$2,271
Projected Payment (Yr 6+)
$2,733
Total Cash Paid In
-$201,864
Loan Balance Remaining
-$358,963
Because you are keeping the loan for 7 years, you will be exposed to the higher adjustable rate after year 5. A fixed rate provides long-term safety.