Fixed vs. Adjustable Rate Mortgage in Nashville: Which Loan is Right for You?

By Kevin Leonard, Award-Winning Mortgage Expert

Choosing between a fixed vs. adjustable-rate mortgage (ARM) in Nashville is one of the most critical decisions you’ll make when financing a home. The right mortgage can save you thousands over the life of your loan, while the wrong one could lead to financial strain.

As a Nashville-based mortgage expert with decades of experience, I’ll break down the key differences, pros and cons, and local market insights to help you decide which loan aligns with your financial goals.

Fixed vs. Adjustable Rate Mortgage: Key Differences

1. Fixed-Rate Mortgage (FRM) in Nashville

A fixed-rate mortgage locks in your interest rate for the entire loan term, meaning your principal and interest payments stay the same.

Best for:
✔ Homebuyers planning to stay in their homes long-term (7+ years)
✔ Those who prefer predictable monthly payments
✔ Borrowers in a low-interest-rate environment

Current Nashville Market Insight:
With 30-year fixed mortgage rates in Nashville hovering between 6.5% - 7.5% (as of [current date]), locking in a rate now could be advantageous if rates rise further.

2. Adjustable-Rate Mortgage (ARM) in Nashville

An adjustable-rate mortgage starts with a fixed rate for an initial period (e.g., 5/1, 7/1, or 10/1 ARM), then adjusts periodically based on market conditions.

Best for:
✔ Buyers planning to move or refinance before the adjustment period
✔ Those expecting income growth to offset future rate hikes
✔ Short-term homeowners or investors

Nashville-Specific ARM Considerations:

• 5/1 ARM rates in Nashville are often 0.5% - 1% lower than fixed rates initially.
• Adjustment caps (how much your rate can increase per period) vary by lender—always compare terms.

Pros and Cons: Fixed vs. Adjustable Rate Mortgage in Nashville

When to Choose a Fixed vs. Adjustable Mortgage in Nashville

✅ Choose a Fixed-Rate Mortgage If:

• You plan to stay in your home 10+ years
• You value budget consistency over potential savings
• Current Nashville fixed mortgage rates are historically low

✅ Choose an Adjustable-Rate Mortgage If:

• You’ll sell or refinance before the adjustment period
• You expect higher future income to handle possible rate hikes
• You’re in a high-rate environment and want lower initial payments

Nashville Mortgage Lenders Offering Fixed and Adjustable Rates

Several local Nashville lenders, including Shop Rates, provide competitive options for both fixed and adjustable-rate mortgages. Always compare:

• Interest rates (APR)
• Loan terms (30-year fixed vs. 5/1 ARM)
• Closing costs (Nashville averages 2% - 5% of loan amount)

Refinancing from Fixed to ARM (or Vice Versa) in Nashville

Many homeowners refinance their Nashville mortgage to switch loan types based on market conditions. Use a refinance calculator to determine if switching from a fixed to ARM (or vice versa) makes financial sense.

FAQ: Fixed vs. Adjustable Rate Mortgage in Nashville

1. What are the current fixed vs. adjustable mortgage rates in Nashville today?

As of [current date], 30-year fixed rates average 6.5% - 7.5%, while 5/1 ARM rates start around 5.5% - 6.5%.

2. Which type of mortgage is better for a first-time home buyer in Nashville, fixed or adjustable?

First-time buyers often benefit from fixed-rate mortgages for stability, but an ARM could save money short-term if they plan to move within 5-7 years.

3. What are the pros and cons of a fixed-rate mortgage compared to an ARM in Nashville?

• Fixed Pros: Stable payments, long-term predictability.
• Fixed Cons: Higher initial rates.
• ARM Pros: Lower initial rates, potential savings.
• ARM Cons: Future payment uncertainty.

4. How do interest rate changes impact adjustable-rate mortgage payments in Nashville?

ARMs adjust based on index rates (like SOFR) + lender margin. If rates rise, your payment could increase significantly after the fixed period.

5. When should I consider a fixed-rate mortgage over an adjustable-rate mortgage in the Nashville market?

• If interest rates are low
• If you plan to stay in the home long-term
• If you prioritize payment stability

6. What are the average closing costs for fixed vs. adjustable mortgages in Nashville?

Closing costs typically range 2% - 5% of the loan amount, regardless of loan type.

7. Can I refinance from a fixed to an adjustable mortgage (or vice versa) in Nashville?

Yes, refinancing is an option, but evaluate break-even costs and future rate projections before switching.

8. What local Nashville lenders offer both fixed and adjustable-rate mortgage options?

Shop Rates, local banks, and credit unions provide both loan types. Compare terms for the best deal.

9. How long do adjustable-rate mortgages typically stay fixed in Nashville before adjusting?

Common ARM terms: 5/1 (5 years fixed, then adjusts annually), 7/1, or 10/1 ARMs.

10. What economic forecasts for Nashville should I consider when choosing between a fixed and adjustable mortgage?

Monitor:

• Fed rate decisions
• Nashville housing market trends
• Inflation and employment data

Final Verdict: Which Mortgage is Best for You?

The best choice depends on your financial situation, timeline, and risk tolerance.

• Fixed-rate mortgages = Long-term stability
• Adjustable-rate mortgages = Short-term savings

Need personalized advice? Contact Shop Rates, Nashville’s trusted mortgage experts, to compare fixed vs. adjustable rate mortgage options tailored to your needs.