What’s an ARM Loan?

ARM stands for Adjustable Rate Mortgage. It typically starts with a lower fixed rate for a set number of years (like 5, 7, or 10), and then the rate adjusts—usually annually—based on the market.

✅ Pros of an ARM Loan:

• Lower initial rate: You’ll usually get a better starting interest rate than a fixed-rate loan.

• Lower initial monthly payment: Great for buyers who don’t plan to stay in the home long-term.

• Can qualify for more home: The lower rate may boost your purchasing power.

⚠️ Cons of an ARM Loan:

• Rates adjust: After the initial fixed period, your rate—and monthly payment—can increase significantly.

• Uncertainty: If you’re not planning to move or refinance, future rate hikes could sting.

• Not ideal for long-term holds: If this is your forever home, a fixed-rate or buydown may be safer.

What’s a Permanent Buydown?

A permanent buydown is when you pay an upfront fee (or the seller pays it as a concession) to lower your interest rate for the life of the loan. It’s not temporary like a 2-1 buydown—this is permanent.

✅ Pros of a Permanent Buydown:

• Lower rate for the life of the loan: Peace of mind knowing your payment stays predictable.

• Big savings over time: You’ll save more the longer you keep the mortgage.

• Can be negotiated: In today’s market, many sellers or builders are offering buydowns as an incentive—so you may not have to pay for it yourself!

⚠️ Cons of a Permanent Buydown:

• Upfront cost: You (or the seller) need to pay more at closing.

• Break-even timeline: If you sell or refinance too soon, you may not recoup the upfront cost.

• May not be the best use of cash: Depending on your financial goals, putting that money toward a bigger down payment or other investment might make more sense.

So Which One’s Better?

That depends on you.

• If you’re planning to stay in the home for 10+ years, a permanent buydown can bring long-term savings and stability.

• If this is a starter home or you plan to refinance in a few years, an ARM loan might make more sense.

And here’s the good news: You don’t have to figure it all out alone. I work with some amazing lenders who can run the numbers side by side and show you exactly what works best for your budget and timeline.

Let’s Chat

If you’ve got questions about how these financing tools can be used in today’s market—or want to see homes where sellers are offering buydowns or closing cost help—reach out! I’d love to help you navigate your options with confidence.

And if you're wondering whether an ARM loan or permanent buydown makes the most sense for your situation, I can connect you with one of my trusted lender partners who will break it all down and help you decide what’s best for your goals.

📲 Call or text: 702-265-4323
📧 Email: kelijameslv@gmail.com
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🏡 Keli James Group

Let’s make a smart move—together.