Always go for the lowest initial interest rate
It might be true that a higher interest rate might mean a bigger monthly payment. However, don’t base your entire mortgage decision only on the interest rate, at least not on the initial one.
Adjustable-rate mortgages, or ARMs, will always have lower initial rates than those fixed-rate mortgages. However, interest rates on this kind of mortgage automatically reset once in a while.
When this happens, your rate might rise, which will make your payments even bigger. From this perspective, adjustable-rate mortgages are some kind of sophisticated loans for those borrowers who are able to understand and manage any risks.
If you expect to sell the home or even the refinance before your interest rate fully resets, an adjustable-rate mortgage is an ideal choice for you.
If not, you might feel better and safer having a fixed-rate mortgage. And even if you pay a bit more on your interest rate, your payment and interest rate will be the same for the entire lifespan of your loan, and there are lesser chances for your payment to become unaffordable.
But keep in mind that selecting an adjustable mortgage based only on the initial low-interest rate is nothing but a mortgage mistake.
I want out of my mortgage. The fixed APR is fine, I am getting tired of being nickeled and dimed to death by my mortgage company. Seems like every time I turn around they are tacking on some kind of new fee.