Fixed vs. Adjustable-Rate Mortgages: What Buyers Need to Know
The mortgage question that comes up most often in our branches right now isn't "Can I qualify?" — it's "Should I go fixed or adjustable?" In the current rate environment, it's a genuinely interesting question, and the right answer depends almost entirely on how long you plan to stay in the home.
The case for a 30-year fixed
A 30-year fixed-rate mortgage is the bedrock product of American homeownership for a reason: it removes interest rate risk entirely. You know exactly what your principal and interest payment will be in month one and in month 359. For buyers who plan to stay in a home for 10+ years or who want maximum predictability in their monthly budget, a 30-year fixed is almost always the right answer.
Summit Bank's current 30-year fixed rate is 6.875% APR. On a $500,000 loan, that's a monthly principal and interest payment of approximately $3,285.
The case for a 15-year fixed
If you can afford a higher monthly payment, a 15-year fixed is almost always mathematically superior to a 30-year. You'll pay significantly less total interest over the life of the loan, and you build equity much faster. Summit Bank's current 15-year rate is 6.125% APR.
The trade-off: the monthly payment on that same $500,000 loan is approximately $4,258 — about $973 more per month than the 30-year. For buyers who can absorb that difference, the lifetime interest savings are substantial.
When an ARM makes sense
A 5/1 ARM (adjustable rate for the life of the loan, fixed for the first 5 years) typically carries a rate 0.5–1% below the comparable 30-year fixed. For buyers who are confident they will sell or refinance within 5 years — a common scenario for people early in their careers or buying a starter home — an ARM can deliver real monthly savings with minimal rate-change risk.
The risk: if you're still in the home when the adjustment period begins, your rate resets to whatever the index rate is at that point, which could be meaningfully higher. Don't take an ARM unless you genuinely have a plan for what happens at year 5.
What New England buyers often overlook
New England home values have historically appreciated faster than the national average, which means equity builds relatively quickly here. That reduces the relative importance of the amortization speed difference between a 30-year and a 15-year, and it increases the upside of getting into the market sooner on a lower-payment product. Don't let perfect be the enemy of good.
Talk to a Summit mortgage specialist
The right product for you depends on your income stability, how long you plan to stay, what the rest of your financial picture looks like, and whether you qualify for any first-time buyer programs that change the calculus. Summit Bank mortgage specialists are at every branch, Monday through Saturday, and can model all three scenarios side by side in under 30 minutes.