hey yellowpad, nice to know there's another mortgage fi guy out there. we should talk shop sometime soon.
i'd echo what he said. additional thoughts;
based on what you indicated, id assume you are upperlevel credit wise. so you are in a position to capitalize on the best rates possible at this point in time. in other words, you have all the options available.
your choices should be based on your future plans. If you know that youre going to be getting out of this house pretty soon, then an arm would be a no-brainer. I would, however, recommend a two year arm, not a six month arm. the rates arent significantly different and the rate would not be subject to potential fluctuation for two years. many arms are set up to automatically adjust up in the fine print, so you wind up paying more after only six months.
if you are uncertain about moving, then definately go with the fixed. a thirty year fixed would make sense if you have the discipline to set up an amortization schedule on fifteen years and stick to it. the reason is, the excess payment represented by the fifteen year amortization automatically goes towards the principal. end result is that your 30 yr note which you voluntarily pay at a 15year payment schedule gets paid off in less than fifteen years. so it is actually a better deal than taking a fifteen year note. even though the thirty year note is higher interest, you actually wind up paying less interest over the duration than with a fifteen year note due to the above reason. but you HAVE to have the discipline to stick with your voluntary fifteen year payment schedule on that thirty year note. i have figured this in the past and i recall that you actually wind up paying off your note in 12-13 years if you follow this plan.
if you lack the discipine(like me), then take the fifteen year note. you'll find that the payments compared to a thirty year are not all that much higher and you'll save tens of thousands of dollars over the long haul.
keep in mind that interests rates are as low as you can expect to see. dont expect greenspan to effect rates other than towards an increase. at this point he can have a negative effect on rates, not positive.
if you are not expecting to stay in your home, then you should look at buying now. you will probably never see lower rates than today. That is a major reason why the purchase market is so active right now.
summary, if you arent in the house you want to be in for the next 10 years, look at buying it now if you can afford it. if you cant afford it, then weigh out the likliehood of selling your home in the next five years. If it is extremely likely, then the arm might make sense. if it is suspect, then go with either the fifteen or thirty.
hope this helps. I'm in the secondary mortgage market so i've seen a lot of different scenarios play out over time. short term arms are a gamble where youre betting you wont be living in your current house very long, or that the interest rate in the future will go down. personally, i wouldnt bet on the rate, at this point thatd be like taking a hit on 19. only you can answer the house question. good luck. feel free to private me if you have additional questions. one last thought, make sure you dont have a prepay if you are looking at an arm.
