Why not a neg-am 1% start rate loan?? :  
just kidding..
How large is the loan? The larger the loan the more I like the ARM. Small differences in rate make large differences in payment on larger loans. Lets use the Pen Fed Rates:
Example 1:
$900,000 w/ 30 year fixed at 6.125% = $5,468.49 Principle and interest
$900,000 w/ 5/1 ARM at 5.75 =$5,252.16 Principle and interest
thats $216.33 per month x 12 months = 2595.96/ yr x 5 years = $12979.80
This seems like alot to pay for 'comfort'.
Example 2:
$250,000 w/ 30 year fixed at 6.125% = $1,519.03 Principle and interest
$250,000 w/ 5/1 ARM at 5.75 =$1,458.93 Principle and interest
thats $60.10 per month x 12 months = 721.2/ yr x 5 years = $3606.00
In this case, the savings are much smaller but certainly $3600 is not chump change. IMHO, If you plan on paying off the mortgage in 5-7 years anyway, why pay any extra interest??
Best of luck!
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