[nolanfan34]

Mrs. Nolanfan and I are in the process of looking to buy a house. I'm having a hard time right now deciding on what kind of financing we should go with. Any economists in the house who want to make a prediction?

One one hand, a 5-year ARM allows us to get a better rate for the short term, and a lower monthly mortgage payment. The question is, what are rates going to look like in 5 years, when it would adjust? We could refinance in that timeframe, but what are the odds we could see rates jump a point or two in the next few years, before we're able to do that?

The 30-year fixed would allow us to lock in a rate, but one that's 5/8 to 3/4 of a point higher than an ARM for the short term. So, a higher monthly payment, etc.

Which is the better gamble at this point? Having a lower monthly payment to start with is somewhat important to us, so we can try to save some money for improvements on the house we buy. But I'm wary of being socked with a higher rate later, if they go way up.