[swolfe]

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4. It is relatively uncommon for people to live in the same home for over 7 years. Therefore, if there's more than a half-point spread between 30-year fixed and a 5-year ARM mortgage (which holds one interest rate for 5 years then jumps to match the market, and usually still works on an imaginary 30-year amortization), you should choose the 5-year ARM as long as it does not trigger private mortgage insurance that you would otherwise not have to pay.

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another thing to consider, both on an investment property and your own home, is going with an interest only loan. the rates are generally lower and with the investment you can cash-flow the amount that would have gone to principle. the problem is that you're then counting on actual appreciation to be able to cash-out refi at some point..but if the primary income from the property is going to be rent, interest only is a good option to consider.

on your own home, the interest only will actually allow you to pay LESS interest over the life of the loan than either the standard 30-year-fixed or an ARM. both of those standard loan types are front-loaded with interest, but the interest only loan accumulates interest like a credit card. so if you make a full payment and bring down the balance, then the interest on the following month is lower.

i have the countrywide interest only FlexSaver HELOC on two of my houses, if anyone wants to look into it. it's good stuff.

i have 3 rentals currently. i'm hoping to add 2 per year...and i figure between passive income and cash-out refinancing (and poker), i'll be able to retire in about 5 years.