Rates are at an all time low. Also people are hurting now because of our economical down turn and their "surprisely" high arm reset rates a few years back.
But you what you are saying is also true. But how are the low rates even possible? It is because our government is helping out so we can make that turn around.
Moreover, many of the guidelines set today are aimed at consumer education. Many of whom took on NEG ARMs, hence their negative equity. Even HAMP is having a hard time pulling people out with rates as low as 2%.
The other area to consider is that if you are refinancing a purchase loan you may be changing your loan from a non-recourse loan to a recourse loan.
Have your lender run some numbers for you based on the types of loan you are considering, prepayment penalties, or other terms within the loan. Then determine what your goal in refinancing is and does one of the refinance options accomplish that - outweighing any risk.
Most importantly you need to know how long you intend to stay in the house and work around that time period. I would be happy to help you.
Citizens Choice Mortgage
Not knowing your situation it is hard to give you a firm answer.
I have been in this industry for 23+ years & right now in this new mortgage environment I would suggest going with a fixed rate. Nobody knows for sure what their particular situation is going to be 5 years from now & with rates being as low as what they are you can't go wrong! One thing I would suggest is to shop a little further because the 30 yr rate that you have indicated seems a little high. I would also find out what your APR will be, mortgage brokers, bankers or lenders when quoting an interest rate cannot quote without giving you an APR, it is against regulation & subject to fines. Good luck!
If you plan to live in the house for only 5 years then the cheaper rate is better.
Without knowing the specifics of the case I cannot comment about your rates.
Tripoint Mortgage Group, Inc.
Rate sheet below
If the property in question is your primary residence, then I say go for the 4.87 30 fixed. This way you will have no surprises in the future. Keep in mind that even though this is a 1.25 (4.87-3.62) difference, it is only temporary. And that 4.87 is pretty low already, artificially low thanks to our government.
If this is a rental and the mortgage is going to be much lower than the rent, it might be wise for you to go with the 3.62. But you really have to know what you are doing. Know that the 3.62 is simply a teaser rate and that it will change. Know that when the rate changes it'll be higher than the going national rate. ETC. Read the fine print.
Being that you are here asking this question than I say don't go for the ARM. ARMs are dangerous and culpable for many us who are currently going through short sales/foreclosures.
Also, this might help: http://en.wikipedia.org/wiki/Adjustable-rate_mortgage
A good question to ask yourself is how long do you plan on living in the home that you wish to purchase?
If more than 5 years, say 10 years then maybe the 30 year fixed would be best suited, and same applies if you are looking to move again within 5 years to the 5/1 ARM
Get yourself a good lender and they can help, but the final choice will depend on your particular preferences.
Be prepared for lots of opinions. Everyone has an opinion, Its your choice and only yours.
Hope this candid information helps
First Team Real Estate