Rent............since you already know you will be moving in 4 years. Good Luck

I am missing a few pieces of information. One, how will the fixed loan cost you $3800 more in 4 years? Secondly, are you doing a conventional loan, FHA, or VA loan? You may be able to tweak the rate on the ARM to lower your closing cost even more. What is your current mortgage professional steering you towards?

Welcome to Clarksville!

Vicky is correct in her estimate that the cost to sell a home is generally about 10%, this means your house would have to appreciate 10% in 4 years to break even.

While Clarksville is a very stable market (realtively speaking in comparison to the rest of the US) you should not only think about the ARM but your plan to sell in 4 years.

The thought process behind an ARM is that
1) your property value will increase in value enough in 5 years (at the time the ARM woud increase) that you could sell and still make a profit
2) Your income would increase over the next 5 years so that when the ARM increases you could simply afford the payment OR be able to refinance into a better rate

The biggest danger in an ARM is that it works for a few years (while the interest rate is fixed) and then becomes unreasonable once the interest rate increases. Think about where we are today in the marketplace with so many foreclosures ---- people purchased a home with an ARM, they were fine until the ARM increased, at which point their home had not increased in value, their income had not increased and they could no longer afford the home they had been living in for 5 years. It's a difficult scenario.

I would talk to several different lenders to ensure 6.5% is the best rate you can get for a fixed rate. If you are military you may be able to get a VA loan with a slightly lower rate. If 6.5% is the best rate you can get I would look at your potential financial ability in 4 years --- will you be able to afford the increased payment and rent the home if you can't sell for a profit?

Clarksville is a great place to buy, and renting is always a viable option here. You should have your Realtor or Lender go over all scenarios for you so that you can make the best decision for you.

If i can be of any further assistance, please give me a call.

1. I expect rampant inflation in that period - meaning that I would think interest rates would go up considerably.
2. I expect stability (at best) in the market place - not appreciation.
3. Cost to sell a home (national average) is 10% inclusive of taxes, brokerage fees, etc. This means your home will need to appreciate 10% or more for you to break even at closing - I wouldn't count on it.
Personally, I wouldn't do it. It is too risky. Go for the fixed mortgage - try to find one that will be assumable. If it is a good rate and will be assumable in 4+ years when you plan to sell, IF I am right and interest rates have doubled, it will make your home extremely attractive in the marketplace. Ask any old timer in the real estate industry - they will tell you about times (like the early 80s) when people shopped for homes by the assumable loan - not by the price of the home. We could be going there again. Be strategic.