avalpert t1_je8dhh6 wrote on March 30, 2023 at 3:45 AM

Because conventional wisdom doesn't always align with pure rational financial decision making.

Interest rates move up and down - in general, short term rates are lower than long term rates so in general you will pay less over the term of a loan if your rate is tied to shorter rather than longer rates. That said, they are volatile like stock returns, so you are taking on some risk to expose yourself to that volatility. If you can withstand that volatility you are generally better off with the ARM.

mylarky t1_je8e8be wrote on March 30, 2023 at 3:52 AM

I got a 7:1 arm in December 2021 on a construction loan. It would convert to a 30 year with the 7:1 rate of 3.5.

Hit the jackpot, as when I finished building the house and converted to the 30 year loan, rates were screaming at 6.5.

I've got 7 years to refi. If they hit 4.5%<, I'll refi in a heart beat.