i intend to pursue an arm - any difference between 5/1, 7/1 rate wise?

Yes, the shorter the term will have lower rates. Other than that, they are relatively similar where the 5/1 arm is fixed for 5 years while the 7/1 arm is fixed for 7 years. They both adjust after the fixed period has expired.

The shorter the initial fixed rate term the better the interest rate. The ARM's have a fixed rate period and then converts into an 1 yr ARM that adjusts based on the Index+margin. The ARM does have annual and lifetime caps. The 5/1 & 7/1 act identical in most cases after the fixed rate period is completed. It is the rate and qualification that you should be most interested in. A 5/1 typically requires you to qualify at 2% over the initial rate, but a 7/1 ARM allows you to qualify at the starting rate. Sounds like a small issue but it can make a substantial difference in qualifying.Call me if I can help. Curt Tiedeman, NMLS 3554, 425.988.2501 ctiedeman@absoluteloans.com www.CurtTiedeman.com

Dr Olsen - thanks for the question ......5 yr arm is going to be approx .125% to .375% lower than a 7 year arm ( depending on the other parameters in loan sceanrio like ltv / loan amount / credit score ......if you think you will be out of the home or loan in 5 years - go with the 5 yr arm .......otherwise - go with the 7 yr arm if you would like like a specific loan scenario comparison - let me know some details ,,,,Dave Skow Eagle Home Mortgage 206 714 9745 daveskow@eaglehm.com

dr.gregolsen,As Curt has said the difference is lower for the shorter term and each product and company may have different qualifying guidelines. So the best advice I would offer is to talk 2 or 3 local Mortgage Professionals and take the time to request a Good Faith Estimate and Truth In Lending Statement to compare rates and fees. Once you are armed with some facts and information you can talk with the Professionals and see what the qualifying differences and guidelines are. Armed with the right information and education from a Mortgage Professional you can make a decision based on what is best for your needs, situation and plans. If you would like to learn more please feel free to call me at 206-307-2754 or email me at cself@comstockmortgage.com