Mortgage rates are down
If you haven't noticed, mortgage rates have been declining nicely as the stock market has been declining and 10 Year US Treasury rates have fallen below 4%.
Mortgage rates courtesy Countrywide 11/26/2007
Conforming, 1% loan origination fee
30 year fixed 5.75%
5 year ARM 5.25%
7 year ARM 5.75%
10 year ARM 6.125%
Conforming, 0% loan origination fee
30 year fixed 6.0%
5 year ARM 5.75%
7 year ARM 6.0%
10 year ARM 6.50%
Non conforming (over $417,000) 1% loan origination fee
30 year fixed 6.25%
3 year ARM 5.375%
5 year ARM 5.375%
7 year ARM 5.875%
10 year ARM 6.125%
Non conforming (over $417,000) 0% loan origination fee
30 year fixed 6.625%
3 year ARM 6.25%
5 year ARM 5.625%
7 year ARM 6.125%
10 year ARM 6.375%
There is a possibility of a data error with the 3 year ARM above being much higher than the 5 year ARM.
Additionally, you can see that a 10 year ARM rate will be higher than a 30 year fixed in the conforming loan rates. I should point out of course that it is possible for ARM's to have their rates reset lower in the future depending on the movement of Treasuries. I say that because the media seems to be implying that ARM's are a bad loan product and that rate resets will always be higher.
As a personal recommendation, I would choose the safety of a 30 year fixed unless you definitely plan to be in your home for a 5 to 7 year time period. If you are very confident of that, you will benefit by having a lower monthly payment with an interest rate that is fixed for the time period that you choose.
I would also suggest that those who are facing mortgage resets are likely to benefit from the lower mortgage rates we are seeing lately since the reset rate will be a little lower. However, if you have a mortgage with a teaser rate, it is still very likely that rate will reset much higher. If you think you will be in trouble financially, don't wait until it is too late. Get in touch with your lender and make arrangements to modify your loan now. The banks don't really want to foreclose and own real estate and should be willing to help.