ARM vs FRM----advice needed!

My first suggestion would be to get with a lender who is not in any associated with the home builder. Building a relationship with a local Mortgage Broker (Not A BANK), can give you a lifetime of mortgage relief.. having a professional you can call and trust for your mortgage needs is priceless. Your builder is likely to get some sort of kickback for you using their "Preferred Lender", so it's possible you can get a better deal / lower rate elsewhere... that being said, in comparing the options you listed above, I would agree with your selection.. 7/1 ARM looks to be your best option considering your anticipated time in the home. The most the interest could raise in the 8th year is 2%, giving you 4.5% for another year, which is close to what you would get if you did a fixed rate mortgage today... WilliamAcres.com

You are well on the way to understanding how using the right mortgage product can really save your thousands of dollars. I would recommend talking to someone who is not associated with the builder as well. 9 times out of 10 the "preferred lenders" have higher rates/fees than independent mortgage bankers/brokers. It is all about the bottom line...

When you go with a builder preferred lender you will more then likely pay higher fees & rates. Nobody is giving or doing anything for free! I would shop with a mortgage broker, they have accesss to several different lenders & they can usually beat the rates that the preferred lender is offering.I understand that the ARM rates are very attractive, but what you may save in mortgage payment could be a bad choice in todays market. First off nobody really knows how long they are going to stay in their home. I have been in the banking industry for 24 yrs, & know several clients who said they were moving but it never happened for one reason or another. If you're able to get a reasonable rate on a 30 yr fixed, I would go that route. Trust me, in 7 yrs we have no ideas what rates are going to be. I can remember when they were 18%. At least if you have a 30 yr. & you happen not to move then your good. In todays market, the only way I recommend an ARM, is the client knows they will be transfererd etc with their company. Just my opinion!

Lets just say that a 10 year arm will give you the most daily cash to play with scenario. The lower the payment the lower the output required. Principal in any case unless you out right pay down is the last to recieve much in the beginning of any loan. We all know that cash is "king" as longs as it does not affect your lifestyle, making a lower payment is the proper decision as long as you are comfortable with the asset swing of apprecation/depreciation and knowing that a refinance does not neccessary cost if there is a no prepayment penalty situation in your Adjustable Rate Terms.All factors considered The builder is moving his product and yes no matter how you slice it the preferred lender is making money at your expense.Take your time and make a concerted decision the laws change hourly and without a legal analyst at your beck and call trust a mortgage broker. They also get paid for services peformed.Good luck, CHEERS!