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Author: foo1bar Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 128129  
Subject: Re: Number Crunching Date: 2/26/2013 6:55 PM
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3.6% first 5 years -- then resets for another 5 years, etc.
You mean is 3.6% for first 5 years.
Then the next 5 is 4.6%?

Most loans I've seen (which admitedly isn't a lot) are 5-1 or 3-1 ARMs.
So after the first 5 years it annually changes the rate.
If the rates were slowly going up (say prime goes up 0.3% each year) it'd look something like this for each year:

Which loan is better for the first six years?
Get out a spreadsheet and do 72 rows (one for each month) and plug in your assumptions about what interest rates will do.
I'd do a couple different scenarios - including absolute-worst-case-rate-increase-that-maxes-out-the-rate-adjustment-limits
And a realistic-worst-case.

And if I were you, I'd look at both the interest paid, and cashflow (monthly payment)
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