Choosing the right mortgage is one of the most important financial decisions a buyer makes. Your loan structure affects your monthly payment, long term affordability and your overall strategy whether you are buying your first home, upgrading or investing.

A fixed rate mortgage keeps your interest rate and monthly payment exactly the same for the full term of the loan. It creates stability, predictability and peace of mind. Buyers who want long term certainty or plan to stay in the home for many years usually prefer this option.

An adjustable rate mortgage, also known as an ARM, offers a lower introductory rate for a set number of years such as five, seven or ten. Once the intro period ends, the rate adjusts annually based on the market. Buyers who do not plan to hold the property long term, or who want the lowest upfront payment, often choose ARMs.

Pros and Cons of a Fixed Rate Mortgage

Pros

• Predictable monthly payments

• Protection from rising interest rates

• Ideal for long term homeowners

• Easier budgeting and financial planning

• Simple, straightforward loan structure

Cons

• Higher initial interest rate than ARMs

• Higher monthly payment upfront

• Less flexible for buyers who plan to move soon

Pros and Cons of an Adjustable Rate Mortgage (ARM)

Pros

• Lower initial interest rate

• Lower monthly payment during the intro period

• Great for buyers planning to move or refinance before the adjustment

• Increases initial purchasing power

• Favored by short term investors

Cons

• Uncertainty once the rate adjusts

• Potential for higher payments after intro period

• More complex terms that require monitoring

• Not ideal for long term risk averse buyers

San Diego Examples To Make This Real

Let us use a simple example.
Purchase price 900,000
Loan amount 720,000 (20 percent down)

Fixed Rate Example

Rate 6.75 percent
Estimated monthly payment around 4,660 before taxes and insurance
Your payment stays 4,660 for the next thirty years.

7 Year ARM Example

Intro rate 5.50 percent for seven years
Estimated monthly payment around 4,085 before taxes and insurance
Savings compared to fixed rate, approximately 575 per month
Total savings over seven years, approximately 48,000

This is why ARMs work so well for buyers who know they will move, sell, or refinance within seven years.
You get the benefit of the lower payment without carrying the long term risk.

This is also why fixed rates are better for buyers who want absolute stability.
No matter what happens in the market, your payment never changes.

In San Diego, where many homeowners stay in a property between five and eight years before upgrading, ARMs can be a strategic advantage. But for buyers purchasing a forever home or who do not want to track rate adjustments, fixed is the better fit.

Which Option Should You Choose

• If you want stability and predictability, choose fixed.

• If you want the lowest upfront payment and have clear plans to move or refinance, choose an ARM.

• If you are buying an investment property and focusing on cash flow, ARMs often make more sense.

• If you are sensitive to payment changes or prefer low risk, fixed is safer.

There is no wrong choice. There is only the option that best matches your goals.

Call To Action

If you are unsure which loan structure fits your situation, reach out to me and I will walk you through both options based on your budget, your long term plans and the type of property you are looking at. I work closely with amazing lenders who can run side by side estimates so you can see your exact payment in both scenarios.

Whether you are buying your first home, upgrading, or looking at an investment property, I will help you make the smartest financial decision for where you are right now and where you want to go next.

Just send me a message and I will take care of the rest.