Fixed vs Adjustable rate, what to chooose.

[Noyessie Hubert]

Hi, I just spotted a 4-family room which makes sense for me and my credit union is offering a conventional loan mortgage for 5% down.  Here are the two options the lender offered to me:

- Option 1: 30-year conventional

interest rate: start at 9%

final rate from home appraisal

0 discount point

$0 origination fees

- Option 2: Adjustable rate 3/5 or 5/5

interest rate: start at 7%

0 discount point

$0 origination fees

I plan to take a loan for a $650k house with 5% down. I have a 770+ in credit score. I don't understand quite well the adjustable rate. Please can someone help me navigate over that?

- What questions should I ask?

- what is the tip when you consider an Adjustable rate? Can we refinance it after less than 3 years?

Thanks for your help.

[Noyessie Hubert]

Decided to go with a fixed-rate mortgage that I found at 7.5%. 

The ARM was too good to be true. After discussing with another agent, those rates were available for up to 2 units. The credit union doesn't finance properties that are more than 2 units.