On Choosing Fixed vs ARM

Mortgage rates are rising -- sharply even. But given how different mortgage products are reacting to the new market mentality, the relative benefits of a 5-year ARM to homeowners are higher than they've been in history.

Overwhelmingly, refinancing homeowners are choosing fixed rate mortgages over adjustable ones. But is it logical? Go deep on the numbers and see for yourself.

According to a Freddie Mac report of its own mortgage holdings, homeowners that refinance their mortgages are pouring into fixed rate products. Fixed rate mortgages accounted for 95% of all refinances backed by Freddie Mac in Q1 2010.

It's a common question with rate shoppers. Which is better? A fixed rate mortgage or an adjustable rate mortgage? In short, it depends. And the chart at top shows why.
ARMs And Fixed Rates Don't Move In Unison
Mortgage rates are based on the price of mortgage-backed bonds, a group of securities bought and sold [...]

The 30-year fixed rate mortgage isn't such the no-brainer anymore. After thoroughly thumping the interest rates on an equivalent 5-year ARM since December, the 30-year fixed has reclaimed its honor as "Most Expensive Mortgage Product". The chart shows the difference as a half-percent, but real-life pricing puts it closer to 1.000%. Right now, adjustable rate mortgages are very attractive to the right type of homeowner

Wait! Before You Ditch That ARM, Make Sure Your Mortgage Rate Won't Be Adjusting Lower

Adjustable Rate Mortgages Look Attractive When Compared To Fixed Rate Mortgages