7/1 ARM or 30 year mortgage

[Sunny S.]

Which is better ?

7/1 ARM or 30 year mortgage loan option when you buy a home ?

[Andrew Postell]

@Sunny S. you will need to ask your lender who is offering the 7/1 ARM what their terms are. In most cases, the rate is LOWER than the market rate to entice you into staying in the ARM. Keep in mind that ARMs do help banks more than most consumers. With rates being so low right now on a 30 year loan it's a hard decision to take an adjustable loan. How much does it save you per month? $50? $75? And that's $75 to risk against your rate adjusting? Sort of hard to justify it right now. If market rates were 7%...ok, then we have a discussion but the "floor" on most of those ARMS is just barely lower than what the current market rate is now. That's my opinion on it for whatever it's worth.