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Switching from an ARM to a Fixed-Rate Mortgage–What to Know

When you became a homeowner, you might have opted for an adjustable-rate mortgage (ARM). Now, years later, you might be considering refinancing to a fixed-rate mortgage. Let’s explore when refinancing makes sense, the process involved, and other crucial details to help you decide whether to stay with an ARM or switch to a fixed-rate mortgage.

Can You Refinance an ARM Loan?

Yes, refinancing an adjustable-rate mortgage is possible and straightforward. By refinancing, you replace your existing loan with a new one, often a fixed-rate mortgage. Requirements vary by lender, so consult with your mortgage lender to understand their specific criteria and determine if refinancing suits your needs.

Adjustable-Rate Mortgage vs. Fixed-Rate Mortgage

Adjustable-Rate Mortgage (ARM):

  • Interest Rate Adjustments: An ARM starts with a low, fixed interest rate for an introductory period (5, 7, or 10 years). After this period, the rate adjusts periodically based on market trends.
  • Rate Caps: ARMs have caps that limit how much the interest rate can change at each adjustment period and over the loan’s lifetime.
  • Best For: Those who expect to move or pay off the loan before the introductory period ends.

Fixed-Rate Mortgage:

  • Stable Interest Rate: The interest rate remains the same throughout the loan’s term, ensuring predictable monthly payments.
  • Best For: Borrowers who want stable payments and an interest rate that won’t change over time.

Reasons to Consider Refinancing Your ARM Loan

Refinancing your ARM might be beneficial if you:

  • Want stable monthly payments.
  • Can secure a lower interest rate.
  • Are nearing the end of your ARM’s introductory period and wish to avoid potential rate increases.
  • Want a shorter loan term.
  • Have sufficient home equity and want to take cash out of your home.

How to Refinance an ARM Loan to a Fixed-Rate Mortgage

  1. Choose a Lender:
    You can refinance with your current lender or shop around for better terms. Compare different lenders to find the best fit for your needs.
  2. Fill Out Your Application:
    Apply for the new loan with your chosen lender. They will review your financial information, including income, credit score, property, assets, and debts.
  3. Provide Necessary Documentation:
    Submit documents like pay stubs, bank statements, and W-2s. If self-employed, provide up to two years of tax returns and other relevant documents.
  4. Lock in Your Interest Rate:
    Lock in your interest rate when you apply to avoid rate fluctuations before closing.
  5. Close on Your New Loan:
    Once approved, you’ll close on the new loan, pay any closing costs, and sign the necessary documents. The lender will pay off your original loan, and you’ll start making payments on the new mortgage.

ARM Refinance Requirements

General requirements include:

  • Homeownership for at least six months.
  • At least 20% equity in your home.
  • Minimum credit score of 620 for conventional loans (580-620 for FHA loans and 580 for VA loans).
  • Debt-to-income (DTI) ratio under 50%.


Refinancing your ARM to a fixed-rate mortgage can provide predictable monthly payments and protect you from interest rate fluctuations. Review your financial situation to determine if refinancing is the best move. If it helps reduce financial stress or lock in a lower rate, switching to a fixed-rate loan can be a smart choice. Contact one of our mortgage professionals to explore your options and start the refinance approval process today.

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