Fixed-Rate Mortgages Remain Best Option

I'll admit that I have used adjustable-rate mortgages in the past. But that was for buying properties that I knew I would not be living in for very long -- at least not long enough to take the hit when the loan adjustment period rolled around. It was also a good option for keeping payments low while I fixed up the place to sell it.

Not to mention the spread between fixed-rate mortgages and adjustables back then were about two points in rate.

Nowadays, adjustable-rate mortgages don't make a lot of sense to use. The spread difference is too thin, sometimes only 1/4 of a point. Hardly worth the risk. Because most home buyers prefer fixed-rate mortgages. They always have and probably always will.

Plus, when rates are low, it often makes sense to refinance into an even lower rate when it becomes available. I feel fortunate to have snagged a 4.875% fixed-rate mortgage three years ago, and I've never regretted refinancing. I made up the closing cost difference within 18 months and have been riding the gravy train ever since. In fact, it's one of the reasons I'm not keen on moving any time soon. But don't tell my please-don't-make-me-move-again husband. I like to keep him on his toes.

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