4.75 Fixed or 3.8 ARM for 7 years?

Tips and Deals Forums Home Mortgage 4.75 Fixed or 3.8 ARM for 7 years?

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      We finally were approved for a home last month. Our loan officer is really pushing us to take a 3.8 ARM for seven years. The difference is only about $100 dollars a month. A friend advised me that we probably would not be saving $100 a month but just spending it somewhere else. I thought maybe putting in in savings or increasing our 401 k contributions. After 7 years the rate could go up as high as 9 percent. Obviously we would try to refinance during that time but we have no idea what the rate would be at that time but we assume it would be higher than 4.75 percent. We plan to stay in the home for about 10 years. We are just looking for advice, thanks.

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