Is a 30-year fixed mortgage better than a 10/1 arm?

A 30-year fixed mortgage, on the other hand, offers the stability of a consistent interest rate for the entire loan term, making long-term planning easier. Which option generally has a lower initial interest rate, a 10/1 ARM or a 30-year fixed-rate mortgage?

How long does a 10/1 arm last?

A 10/1 ARM has a 30-year term. For the first 10 years the interest rate is fixed. Then, for the next 20 years, the interest rate can increase or decrease once a year depending on the formula stated in the loan agreement. This is what the “10” and the “1” refer to in the name of the mortgage.

Is a 10/1 adjustable rate mortgage (ARM) worth it?

A 10/1 ARM may save you some money with an interest rate only .125% or .25% cheaper than a 30-year fixed mortgage. However, many people don’t stay in the same home or keep their mortgages for a decade, so the 10/1 ARM could make sense without any significant downside.