Congratulations—you’ve decided to put down roots in one of Northern California’s most scenic and community-rich areas: Humboldt, Del Norte, and Trinity counties. Now comes another important decision in your homebuying journey: Should you choose a fixed-rate or adjustable-rate mortgage (ARM)?
The short answer? It depends … on your goals, how long you plan to stay in your home, and how comfortable you are with interest rate changes. Here’s what you need to know to compare mortgage types.
What’s a Fixed-Rate Mortgage?
A fixed-rate mortgage locks in your interest rate for the entire life of the loan—typically 15, 20, or 30 years. That means your monthly payment for principal and interest won’t change—even if market interest rates go up or down. This stability offers peace of mind for the long term.
Consider these fixed-rate mortgage benefits:
- Budgeting is easy with predictable monthly payments.
- You’re protected against rising interest rates.
- It’s a good fit if you’re not planning to move anytime soon.
- The terms are simple to understand and manage over time.
Want to get a rough idea of your potential fixed-rate payment? Try out Coast Central’s Calculate a Mortgage Payment.
What’s an Adjustable-Rate Mortgage (ARM)?
With an ARM, you get a lower starting interest rate—usually fixed for 3, 5, 7, or 10 years. After that, it adjusts at regular intervals based on a market index plus a margin. That means your payment can go up or down over time.
Today’s ARMs are more transparent and regulated than in the past. They include built-in safeguards—called rate caps—to limit how much your rate and payment can go up during each adjustment period and over the life of the loan. Be sure to ask your lender for the actual dollar amounts of those caps, not just the percentages, to avoid surprises.
Consider these ARM benefits:
- Lower payments at the start give you more breathing room early on.
- You may save money if you move or refinance your mortgage before the rate adjusts.
- If rates go down, your payment could, too.
Consider these ARM risks:
- Your monthly payments might increase after the initial term.
- Budgeting can get trickier if your rate changes a lot.
- It’s not ideal if you want to stay in your home long term.
Not sure how an ARM might look for your situation? Check out Coast Central’s ARM Analyzer.
Quick Self-Check: Fixed or Adjustable?
Use these questions to help you determine which mortgage would be best for your situation:
- Will you move or refinance before the ARM adjusts?
- Can you handle a bigger payment if rates rise?
- Is your income stable and likely to grow?
- Are interest rates high now but expected to fall?
- Are you okay with some financial unpredictability?
If you answered “yes” to most of these, an ARM might work for you. If not, a fixed-rate mortgage is likely the safer bet.
Need Help Deciding? Coast Central Has Your Back!
Choosing the right mortgage can feel overwhelming, but you don’t need to make the decision alone. That’s why Coast Central Credit Union is here—not just to offer competitive rates and flexible options, but to actually talk with you about your life, your goals, and your budget. We can provide the local expertise and trusted advice you need to feel confident in your choice.
Whether you’re buying your first home, upgrading, or downsizing, our mortgage experts can help you sort through your options, get pre-approved, and walk into the home search with confidence. Plus, we offer financial guidance to help you build a smart plan for sustainable homeownership—not just for today, but for years to come.
Ready to get started? Learn more today!
Coast Central—Where YOU are central.