17 Oct Should I get an adjustable mortgage for a second home?

Q. I’m considering a second home and interest rates are higher than I’d like. I’m not sure how long I will keep the property — it’s not a forever property, but an opportunity for some rental income for now — so does it make sense to use an adjustable rate, which is lower than a fixed rate mortgage? How can I decide?
— Investor, maybe

A. That’s a smart question.

There’s more than one answer because so much depends on your personal situation, not to mention moves and differences for interest rates.

There are several issues to consider for adjustable rate mortgages (ARM) compared to fixed rate options, said Marc Calicchio, vice president of mortgage lending Nutley-based Rate.com. 

He said he will discuss with buyers how long they plan to keep the home because that will determine how long the fixed period of the ARM will need to be.

Typically, ARMs have a fixed period of either 3, 5 or 7 years, he said.

“I always suggest looking into the ARM that will cover them for a year or two longer than they plan on keeping the home for,” he said.

The biggest factor to consider is how much lower is the interest rate on the ARM compared to the fixed rate option, Calicchio said.

“If the difference between the two is less than .25%, I always suggest going with the fixed rate option,” he said, noting he tends to be conservative with financial decisions. “If the difference on the ARM is .375% to 1% compared to the fixed rate option, that is a different story.”

Calicchio said borrowers need to understand how the ARM works, and that if they do not pay that mortgage off in full by selling the home or refinancing prior to the mortgage becoming adjustable, there will be an increase in their monthly payment.

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This story was originally published in October 2025.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.