What is the best type of short term loan. 3/1, 5/1 or 7/1? is there a sweet spot? for example 5/1 i hear is the most common and hence "best value" comapred to other 2. is that correct?

The answer to this is based on the length of time you are planning to be in the home. Chances are very good that the rate on any the ARM's mentioned will increase at the first reset after the fixed period has expired so only you can answer it. If you have no problem accepting rate risk then the 3/1 will give you the lowest starting note rate right now. This rate however will be only 3/8 to 1/2 % lower in rate compared to a 30 yr fixed. if you plan to be out of the mortgage in 3 yrs then a good deal but if you are unsure then the 30 yr fixed makes sense.

I have found the pricing on a 5/1 ARM is the same or better than the 3/1 ARM so if your time horizon for a new loan is within a 5 year timeline I would recommend going with a 5/1 ARM. If you can get two extra years with little to no added cost in rate or fees why not. If you look at my rates you will see the rates are actually better on the 5/1 ARM today...and has been for the past few weeks. As always...its important to find the product that is going to fit your situation best and it would be worth talking with a professional mortgage broker/originator to make sure you are aware of the risks on ARM products and that the term/product will be a good fit for you.