Should You Choose an Adjustable Rate Mortgage in Michigan? Here’s What to Know.
If you’re shopping for a home loan in Michigan, you’ve likely come across the term Adjustable Rate Mortgage — also called an ARM.
These types of mortgages can offer lower initial interest rates, but they come with some important differences compared to traditional fixed-rate loans.
In this post, we’ll break down:
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What an ARM actually is
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How adjustable rate mortgage rates work
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The pros and cons of ARMs
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And whether an ARM might be right for your homebuying goals
What Is an Adjustable Rate Mortgage?
An Adjustable Rate Mortgage (ARM) is a home loan with an interest rate that can change over time. Most ARMs start with a fixed-rate period (usually 5, 7, or 10 years), followed by a period where the interest rate adjusts at regular intervals — often annually.
Common ARM Terms:
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5/1 ARM = Fixed rate for 5 years, then adjusts once per year
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7/6 ARM = Fixed for 7 years, then adjusts every 6 months
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Adjustment Cap = A limit on how much your rate can increase at each change
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Lifetime Cap = A limit on how high your rate can ever go
Why Choose an ARM?
1. Lower Initial Interest Rates
The big draw of ARMs is that their starting rates are often significantly lower than fixed-rate mortgages. This can mean lower monthly payments — especially helpful if you’re trying to qualify for more home or build savings in the early years.
2. Great for Short-Term Homeowners
If you plan to move, refinance, or pay off the loan before the fixed-rate period ends, an ARM can help you save money upfront.
3. Rate Caps = Some Protection
Most ARMs come with built-in caps to limit how much your rate (and payment) can rise, so you won’t be totally at the mercy of the market.
What Are the Risks of an ARM?
1. Uncertainty After the Fixed Period
Once the introductory period ends, your rate can increase — sometimes significantly — depending on market conditions.
2. Harder to Budget Long-Term
If your income is tight or you’re not planning to move anytime soon, the payment variability might cause stress down the road.
3. Not Ideal in Rising Rate Markets
If interest rates are trending upward, your adjustable rate could reset higher than a fixed-rate alternative.
Is an Adjustable Rate Mortgage Right for Me?
You might consider an ARM if:
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You expect to move or refinance before the fixed-rate period ends
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You want to maximize buying power with a lower initial rate
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You’re comfortable with some interest rate risk later on
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You’re purchasing a starter home, second home, or investment property
At JPAL Mortgage, we’ll help you compare both ARM and fixed-rate options side-by-side — so you understand what you’re choosing and how it impacts your future.
What Are Today’s Adjustable Rate Mortgage Rates?
ARM rates vary based on market conditions and loan structure. We’d love to run the numbers for you and show how today’s ARM rates compare with your other options.
Request a personalized quote
Or call us at: 616-465-5725
Final Thought
Adjustable Rate Mortgages aren’t right for everyone — but in the right situation, they can be a smart, strategic tool to save money and make your home dreams a reality.
Want a clear, honest breakdown of whether an ARM fits your budget and timeline?
Let’s talk. We’re your best friend in home finance — and we’re here to help.
Book a free meeting or phone call — or call us at 616-465-5725. We would love to speak with you!
JPAL Mortgage is proudly based in Michigan, where its two owners were born and raised! We love this state and have traveled it far and wide. It’s a passion of ours to help make a smooth landing here in Michigan! Learn more about the team at JPAL
JPAL Mortgage – Your best friend in home finance.
All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. NMLS ID #2189752 | Equal Housing Opportunity