Does it seem like there’s an overwhelming amount of mortgage options today? From 30-year fixed-rate mortgages to 15-year ARM (adjustable rate) mortgages and even FHA loans, you’re probably asking yourself which is the best option when buying a home. That’s where we come in! On top of offering the LOWEST prices per square foot on the market for newly constructed homes, we’ll help you break down two of the most common mortgage options so you can be better prepared for the financing process. In this blog, we’ll discuss ARM vs. fixed-rate mortgages. Which option is better for you? How soon could you refinance your mortgage if rates drop? And why is it important to capitalize on NHC’s low home prices before they’re sold out? We’ll give a hint: our low prices can help make the financing process easier.

Choosing an ARM vs. Fixed-Rate Mortgage

To start, let’s discuss why an ARM might be a better option for you. Let’s say you just found your dream NHC home and want to capitalize on our low prices. Maybe it’s your first home and you have a plan to sell it down the road to move into a different space. If this sounds like you, you might want to go with an ARM vs. a fixed-rate mortgage. We’ll explain why that could be the case. It all starts with the monthly payments.

Compared to fixed-rate mortgages, an ARM mortgage will typically offer lower monthly payments for at least the first few years. There are even some 15/15-year ARM mortgages where you could lock in a lower rate for the first 15 years. One thing to keep in mind, however, is that after that initial period, the rate will adjust—either up or down—depending on market conditions. So, if your interest rate is 4% for the first few years, it is likely you will end up paying a higher rate unless the market continues to fall.

Ultimately, though, if you’re comfortable with a little volatility, the money you save upfront with an ARM could be beneficial in the long term. At NHC, we’ll help you find the right mortgage for your home, ensuring you get the best deal possible on your new property. This is great because it can keep more money in your pocket. And who doesn’t like a little extra cash to throw around?

Choosing a Fixed-Rate Mortgage vs. an ARM

There is nothing to be ashamed of if the thought of a big interest rate increase with an ARM is unsettling. For those who like more predictability, the traditional 30-year fixed-rate mortgage could be the best choice. Simply put, there are no surprises. You’ll always know exactly what you’re paying, no matter what happens with interest rates in the future.

This, coupled with the savings you’ll enjoy on an NHC home, can be a great way to build long-term equity. If interest rates go up, you’ll continue paying the lower rate you started with. If interest rates go down, the refinancing option becomes available again. Have you ever heard the phrase, “Marry the home, date the rate”? A lot of people might not know that you can refinance a fixed-rate mortgage. At NHC, we’ll be by your side throughout your mortgage payments to help you secure lower interest rates when they become available.

How Soon Can You Refinance a Mortgage?

No matter which side you choose in the fixed-rate vs. ARM mortgage debate, it’s important to understand when refinancing could become an option. In some cases, it could be as soon as you want. For example, if you lock in a 6.5% interest rate and they drop to 3% by the next day (unlikely), some lenders may allow you to refinance immediately.

In other cases, lenders will likely want you to wait at least six months after getting your original mortgage to refinance. It’s also worth considering whether it’s actually worth it to refinance, as the process comes with its own set of closing costs. If rates have only dropped by .5% or so, it may not be in your best interest to refinance until they drop further. Regardless, though, with NHC’s low home prices and easy financing through NHC Mortgage, you may not need to worry about refinancing (let alone fixed-rate vs. ARM mortgages), as your monthly payments will be much more affordable. Check out our mortgage calculator to get a better idea of how much you’d be paying for a new home.

NHC: America’s Affordable Builder

We’re on a mission to put affordable homeownership back on the map. In a market where overpriced condos are unfortunately common, we build only price-leading homes that give you the space you deserve for less money. At NHC, homeownership is finally within reach, but our homes won’t be available forever. Don’t miss your chance to secure an affordable slice of the American Dream. Explore our communities across Texas, Alabama, North Carolina, and Florida to find your perfect space today! You can also contact our team if you have any additional questions.

FAQs

How soon can you refinance a mortgage?
You can typically refinance an ARM loan after six months, though some lenders might allow it sooner. Keep in mind that you will need to pay closing costs when refinancing, so it’s best to wait until the new interest rates make the most sense for you.

Can you get out of an ARM loan early?
While you can always refinance or pay off a 15-year ARM loan early, some lenders may charge additional fees.

Is an ARM vs. fixed-rate mortgage better for you?
If you’re looking for lower interest rates in the short term, an ARM loan may be better for you vs. a fixed-rate mortgage.