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Hi, I'm Ella Gurfinkel, your host of the AskElla Show and senior loan officer at Fairway Independent Mortgage. On my podcast, I cut through the noise to bring you honest conversations about real estate, mortgages, and financial planning.
I interview industry experts to tackle everything from homebuying basics to complex topics like reverse mortgages, trusts, and market trends. With decades of experience, I'm passionate about dispelling myths and providing clear, actionable advice.
Whether you're buying your first home, refinancing, or planning for retirement, I'm here to help you make informed decisions. Join me for straightforward talk about real estate and beyond!
fixed rate or ARM adjustable rate. This decision could save or cost you $100,000. With fixed rates around 6 and a4% and ARM starting more like at 5 1/2, more buyers are gambling on adjustable rate mortgages. But here is what they're not telling you about the risks. I'm about to show you when ARMs are brilliant and when there are financial suicide. get this wrong and you could lose your home when rates reset. Do not be the next 2008 horror story in 2026.
I'm Ellen Gurfinkle, senior loan officer with almost 30 years of experience and I live through the armed disasters of 2008 and I've also helped smart buyers save tens of thousands with the right ARM strategy. So today, I'm giving you the unfiltered truth about fixed versus adjustable rate mortgages in 2026. Now, here's what's happening right now. ARM applications jumped 16% just last week, hitting 11% of all mortgage applications. Why? Because people are seeing that half a percent to.9% rate difference and thinking, hey, easy money. My payment is lower, right? But here's what scares the hell out of me. Most people taking arms today have no clue what they're signing up for. They hear five and a half or seven years and think they've beaten the system. So, let me be crystal clear. Today's arms are not the toxic garbage from 2005, 2007, whatever, right? But they're also not free money. There are rules, there are risks, and there are right and wrong times to use them. Let me break down exactly how ARMs work now because most loan officers won't give you the real talk. Current arm options. 56 arm fixed for 5 years then starts adjusting every 6 months. Seven six arm fixed for seven years then adjusts every six months. 10 six arm fixed for 10 years then adjust every 6 months. So right now you're looking at 30-year fixed uh 6 to 6.35%.
7 sixarm around 5 1/2 to 5.67%.
Five six arm around 5.6%. 6%. And yes, that difference might save you $150 to $300 a month initially. Sounds amazing, right? But here is what they don't tell you about the risks. Arms have caps. Usually, it's a five to five structure, which means maximum 5% increase on the first adjustment. Subsequent adjustments are maximum 2% per period and then lifetime cap maximum 5% again above your start rate. Now let me say this this is just one of the ARM structures. Sometimes the adjustments can be 515, sometimes they can be 215 or 125 depending on the loan program. So, it's something just to keep in mind. But if you start at 5 1/2%, your rate could theoretically go as high as 10 12. So, your $2,800 payment could become $3,800 payment. Can you handle that? Now, let's talk about what makes an ARM, which is an index plus margin, makes for an adjustable rate. The index on the majority of arms nowadays is the sofur secured overnight financing rate. When the Fed moves rates, sofur moves. When the sofur moves, your rate moves. It's not magic, right? It's just math. Here is the 2025 reality. The Fed was talking about the rate uncertainty for December. Although now it seems more and more likely that we will see a Fed rate cut come the 19th. Some economists think rates will stay elevated longer than expected. Others predict cuts in 2026. Honestly, nobody knows for sure, and that's exactly the point. You're betting on the future, and the house always has better odds than you do. The difference between ARM and fixed rates has also shrunk. We're talking half a percent to.9% savings, not the 1 and a half to 2% that we saw in 2023 or before. So, is that smaller savings really worth the risk? Look, I am totally not anti-arm. There are smart times to use them. I've used them for myself. I advise clients whether they should take an ARM on a daily basis if their situation fits. So, an R makes sense if you're 100% certain you'll sell or refinance before the rate adjusts. You're a military and you move frequently. You're buying a starter home for 5 to 7 years max. The rate difference is substantial, 1% or more, and you're financially disciplined. So, you can actually save for a rainy day or make bigger payments to make a dent in the principal. You can't afford the maximum possible payment if the rates hit the cap. Fixed rate makes sense if this is your forever home. The stress about financial uncertainty is not something that you can handle. You're stretching to afford the current payment. The rate difference is small, less than a half a percent. So, you want to sleep peacefully at night. I had a client take a 76 arm at 5 and a/4% when the fixed rates were at six. Was it a smart move? His military moving in 4 years. It saved him a chunk of money per month. So, perfect use case. Another client wanted an ARM because it was a quarter% lower than the fixed rate. My honest opinion was to not do it. Why? He was buying his dream home, planning to stay 20 years, and the $75 a month savings wasn't worth the stress. So, here's my rule. If you're asking what if rates go up, then you shouldn't take an AR. ARMS are for people who have a clear exit strategy, not people hoping for the best. Because remember 2008, people took ARMS thinking they'd refinance before the rates adjusted. Then home values crashed, credit tightened, and they were stuck with payments they could not afford. Could it happen again? Different circumstances, but the lesson remains. Don't bet your home on predictions about future rates. Bottom line, arms, they aren't evil, but they're not for everyone. You need someone who will give you the straight truth about whether an arm fits your situation. If you're ready for an honest conversation about fix versus ARM, you can book a consult with me and the link is below. I'll run the numbers, stress test the scenarios, and help you make the right choice for your family's future. Don't gamble with your home. Make an informed decision.