Fixed vs Adjustable Rate: Which Refinance Option Is Better?

When it comes to refinancing your mortgage, one of the biggest decisions you’ll face is choosing between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). Both options can help lower your monthly payments, save money on interest, and potentially help you pay off your home sooner—but the right choice depends on your goals, lifestyle, and financial situation.

In this article, we’ll break down the pros and cons of fixed and adjustable-rate refinance options, explain when each one makes sense, and guide you toward making the best decision for your home and budget.

What Is a Fixed-Rate Mortgage Refinance?

A fixed-rate refinance locks in a single interest rate for the life of the loan. This means your monthly mortgage payments stay the same—no surprises.

Key Benefits of Fixed-Rate Refinancing

• Predictability: Your monthly principal and interest stay constant.

• Long-term savings: Great if you plan to stay in your home for many years.

• Peace of mind: No sudden payment increases due to interest rate hikes.

What Is an Adjustable-Rate Mortgage (ARM) Refinance?

An adjustable-rate mortgage refinance starts with a lower interest rate for a set period (typically 5, 7, or 10 years). After this initial phase, the rate adjusts periodically based on market conditions.

Key Benefits of ARM Refinancing

• Lower initial payments: Great for short-term savings.

• Potential to save: If rates stay low, you could end up paying less.

• Flexibility: Ideal for homeowners who plan to move or sell soon.

When Does a Fixed-Rate Make More Sense?

If you’re planning to stay in your home for the long haul or want consistent monthly payments, a fixed-rate mortgage may be your best bet.

Explore your fixed-rate options here: Home Refinance Options at JNA

Fixed-rate refinancing is also ideal during times of rising interest rates, since locking in a rate now protects you from increases later.

When Is an ARM the Better Choice?

An ARM can be a smart move if:

• You plan to sell or refinance again within a few years.

• You expect interest rates to remain stable or decline.

• You want lower payments now to improve cash flow.

If you’re still unsure whether the timing is right, check out this guide: Is Now the Right Time to Refinance Your Home?

How to Decide Between Fixed and Adjustable Rates

Let’s break it down further.

Other Considerations When Refinancing

Loan Term

Shorter terms (e.g., 15 years) may come with better rates but higher monthly payments.

Closing Costs

Both fixed and adjustable refinance loans involve closing costs, typically 2%–5% of the loan amount.

Your Credit Score

Better credit usually means better refinance terms—regardless of loan type.

Don’t Confuse Pre-Approval with Pre-Qualification

Before you dive into refinancing, know the difference between getting pre-approved and pre-qualified. Many homeowners mix up these two important steps.

Learn more here: Pre-Approval vs Pre-Qualification Explained

Refinancing Strategy: Questions to Ask Yourself

1. How long do I plan to stay in my current home?

2. Do I expect my income to increase or decrease in the near future?

3. Am I comfortable with potential rate hikes?

4. Do I need stability in monthly payments?

Answering these questions honestly will steer you toward the better option.

Conclusion: Fixed vs Adjustable – Choose Based on Your Goals

Refinancing your home isn’t just about getting a lower rate—it’s about choosing a loan structure that aligns with your future plans. If you value stability, a fixed-rate refinance is probably the better fit. But if you’re looking for short-term savings and can manage a little risk, an ARM could deliver serious benefits.

Whichever route you take, be sure to compare all terms carefully and talk to a licensed mortgage advisor. Refinancing can be a powerful financial move—when done right.