A practical guide for home buyers in South King and Pierce County

Aloha! One of the most common questions I get from buyers right now — especially in a higher-rate environment — is some version of: "Should I just pay to get a lower rate? Or is an adjustable mortgage a better deal?"

The answer depends entirely on your situation, not the market trend of the moment. Here's a straightforward breakdown.

The conventional 30-year fixed: the baseline

This is the most common mortgage for good reason. Your interest rate and payment are locked for the life of the loan. You know exactly what you owe every month whether you close in April or hold the home for 30 years.

At current rates around 7%, a $500,000 loan runs approximately $3,327 per month in principal and interest. It's not the cheapest option in the short run, but it's the most predictable — and predictability has real value.

Good fit if: You plan to stay in the home long-term, you value a stable monthly budget, or you expect rates to stay elevated (so refinancing isn't a near-term option).

Buying down your rate: when upfront cost pays off

A mortgage "point" equals 1% of your loan amount, paid at closing in exchange for a lower interest rate. On a $500,000 loan, one point costs $5,000.

Here's how the math might look:

• Without points: 7.0% → ~$3,327/month
• With one point: 6.75% → ~$3,243/month
• Monthly savings: ~$84
• Breakeven: roughly 60 months (5 years)

If you stay past that breakeven point, you come out ahead. If you sell or refinance before then, you've paid for savings you never fully realized.

Good fit if: You have cash reserves beyond your down payment, you're buying a higher-priced home (larger loan = larger monthly savings per point), and you genuinely plan to hold the loan long-term.

Not a great fit if: You're stretching to cover closing costs, or you expect to move or refinance within a few years.

An ARM mortgage: lower now, variable later

A 5/1 or 7/1 ARM gives you a fixed rate for the first 5 or 7 years, then adjusts annually based on a market index. Right now, ARM rates often run a full percentage point or more below 30-year fixed rates.

On that same $500,000 loan at 5.75%, your payment would be approximately $2,919/month — saving you roughly $408/month compared to the 7% fixed.

That's real money. But the risk is real too: if you're still in that loan when the rate adjusts, your payment can jump significantly depending on where rates are.

Good fit if: You know you're relocating in 5–7 years (common with military, corporate relocations, or buyers using this as a stepping-stone home), you expect your income to grow, or you're confident you'll refinance before the fixed period ends.

Not a great fit if: You're buying your forever home, your income is fixed or unpredictable, or you're already at the top of your qualifying budget.

A quick scenario comparison

Taylor is buying a home in Federal Way and plans to be there at least 10 years. She has some extra cash from her sale proceeds. A rate buydown makes sense — the $5,000 upfront cost will pay for itself in savings well before she plans to move.

Marcus is relocating to the Auburn area for a job. His company typically moves employees every 5–6 years, and he expects to sell before the ARM adjusts. The 5/1 ARM saves him $400+ per month and aligns with his timeline.

Priya and David are first-time buyers in Puyallup putting down the minimum and have limited cash reserves after closing costs. Neither a buydown nor an ARM makes sense right now — a straightforward 30-year fixed gives them the stability they need and keeps their finances manageable.

The bottom line

There's no universal right answer here. The best mortgage is the one that fits your timeline, your cash position, and your risk tolerance — not just the one with the lowest rate today.

Before you make this decision, run the numbers with your lender and your real estate broker. I work closely with trusted lenders across South King and Pierce County who can model all three scenarios side by side for your specific purchase.

Questions? I'm happy to walk through what makes sense for your situation.

Warm aloha, Emelie Ortiz | Windermere Real Estate 206.519.7436 | emelie@windermere.com | License #25001933 | Equal Housing Opportunity