Every situation deserves its own review, abby tiscareno  ... but in the case where adjustable rates are lower than a fixed rate (that is not always the case) and the Borrower is likely to sell, refinance, or otherwise payoff the adjustable rate loan prior to its term ending ( 5 yr, 7 yr. etc.) ending, the adjustable rate loan absolutely could be warranted ... and should at least be considered.  

I find upperly-mobile executives ... or those in employment positions where they are likely to be transferred ...  are most open to discussing an adjustable rate loan, as a rule.  

Good question ...

Gene

When you know absolutely, positively, without a doubt that you are going to move in the next 3-5 years.

When the fixed rates are higher by quite a bit and you expect the rates to come down. 

When you definitely plan to stay in the home for no more than 5 years, but I would talk with a loan officer and go with his or her advice.

Hi Abby

Usually poor form to share a link here, but I just wrote a blog about this very subject --- an ARM is a good choice for more than one circumstance:

http://activerain.com/blogsview/5019408/what-s-the-best-loan-product-for-you-

One thing I didn't mention in my blog for the sake of brevity is that FHA ARMs only adjust a maximum of 1% each year, so they are good options because there's never an enormous year over year payment shock.  If things go up, they won't go up too much.

Abby,

What Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi said.

The last 10 years has been awesome to be in one, but now it's time to lock and load the 30 year. UNLESS you need a short loan-3-5 year deal. Timing the market is like day trading though.

Usually when you will be in a home for less than 5 years. With todays still low rates, a 30 year fixed rate is the way to go as we all know rates are only going to go up. 

Every buyers need is different. There is a loan for everyone depending on their circumstances! Talking through your own situation with a lender will help them tailor a loan just for you!

When income is tight...the lower the payment the better

abby tiscareno It depends on the borrower's need and qualification.

That depends on each borrower's need. It will vary depending on the time one plan on residing at the property, their monthly expenses, job stability, etc.

When you don't care about risk.

I wish I still had the article. One of my GRI instructors wrote an article about how an ARM is a better choice than a fixed mortgage over the course of 30 years. If I can find it, I'll share his numbers.

It depends on the individual's situation as well as other factors.

Depends  a lot on the clients situation.. if they need to qualify for the property and they are in a profession where their income is going to rise very fast that would be one example of when it might be the better choice

when rates are going down.

ask a professional

It isn't up to us to determine that, it is up to the Buyer when talking with the lender.

It depends.

On the borrower.  On the situation.  On the goals.

A knowledgeable mortgage professional who asks the right questions and listens to his/her client will be able to offer the best advice.   

That would depend on the buyer and the buyer's situation. 

I'd check with your lender and your tax advisor.  I saw a lot of ARMs back in the day where people thought "I'll sell the house in two years before it adjusts and make a killing!  The market is only going up and up!!"  In reality, the market tanked and these people lost everything when the loan reset to the higher rate.

IMHO I'd never recommend or use and ARM.

There are pros and cons on a adjustable rate.  Get with your lender.

In most cases, when the buyer doesn't plan on keeping the home for a great length of time.

Long term versus short term. Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi has provided a deeper explanation of why.

More data needed.

Both were created to address those in well defined situations. You offer no data identifying the situation.

IN some cases, the buyer goes with the loan they can get.

IN best cases the buyer goes with the loan with an exit strategy the buyer will execute.

The common case is one of good intentions but disappointing outcomes.

abby tiscareno When it meets the buyer's needs for a mortgage.

If you are subject to transfer or relocation in a short period of time!

Use the program that best meets the needs of the borrower. Fixed rates are better for the majority.

When it's lower than a fixed and when the buyer has no risk of a rate going up because he/she will sell the home before then.

Richard Weeks nailed this one!

They can be a good option for short term holding of properties.

Exactly what Richard Weeks said but, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi may be able to answer your question better.

I'm just following to hear what other people think.

When you only plan to  stay in your purchase a few years...

A loan officer can explain based on your needs.

With rates this low - hardly ever

if your stay in the home is not long term....