The alternative would be an adjustable-rate mortgage, in which the interest rate applied on the outstanding balance varies throughout the life of the loan.

A fixed-rate mortgage is an attractive option for Houston borrowers who plan to stay in their home for several years. The alternative to the fixed-rate mortgage is the adjustable-rate mortgage (ARM), which features lower monthly principal and interest payments during the first few years.

ARMs are fixed and variable rate hybrids. These loans are also usually issued as an amortized loan with steady installment payments over the life of the loan. They require fixed-rate interest in the first few years of the loan followed by variable rate interest after that. Amortization schedules can be slightly more complex with these loans since rates for a portion of the loan are variable. Thus, investors can expect to have varying payment amounts rather than consistent payments as with a fixed-rate loan.

While many prefer the security of a fixed-rate loan, an ARM may be a better choice – especially if you know you’ll be moving within the next several years. As always, be sure to consider all of your options and go with the one that’s right for your financial situation.