What’s the Difference Between a Fixed and Adjustable-Rate Mortgage?

When buyers start talking about interest rates, one question always follows: “Should I do a fixed or adjustable-rate loan?”

In Lubbock’s 2025 lending climate, both can be smart—depending on your goals, risk tolerance, and how long you plan to stay in the home.

Let’s break it down.

Fixed-Rate Mortgages
This is the classic option. Your interest rate—and your monthly payment—stay the same for the life of the loan (usually 15, 20, or 30 years). Stability is the big advantage here. No matter how the market shifts, your payment doesn’t.

In today’s environment, most Lubbock buyers still choose 30-year fixed loans, especially if they plan to hold the home long-term or want predictable payments. It’s the safe, steady route.

Adjustable-Rate Mortgages (ARMs)
ARMs start with a lower interest rate for a fixed period—commonly 5, 7, or 10 years—and then adjust annually based on market conditions. That “teaser rate” can mean smaller payments upfront, which appeals to buyers who plan to sell, refinance, or relocate within a few years.

For example, a 5/1 ARM has a fixed rate for five years, then adjusts once per year after that. The rate can go up or down depending on the index it’s tied to.

Here’s how to think about it:

• If you plan to stay in your home 7+ years, a fixed-rate mortgage is almost always the smarter play.

• If you’ll likely move or refinance within 5 years, an ARM might save you money during that window.

That said, adjustable loans come with risk. If rates rise sharply after your fixed period ends, your payment could increase significantly.

When I help clients choose, we don’t just talk about rates—we talk about plans. Are you putting down roots in Lubbock, or treating this as a transitional home? Are you comfortable with future uncertainty in exchange for short-term savings?

There’s no wrong answer—only the right fit.

The good news? Both options are available and competitive, especially with local lenders offering creative programs like temporary buydowns and refinance guarantees.

In short: fixed means peace of mind; adjustable means calculated risk. I’ll help you figure out which kind of stability you actually value most.

Because the best loan isn’t just about today’s rate—it’s about tomorrow’s sleep.

— Insights from Tess Hernandez, Realtor | Reside Real Estate