If you were to get a fixed 30-year mortgage at same that you’re considering hybrid, it is unlikely that you would get a fixed rate that matches teaser rate on ARMs in market. To take full advantage of this type of mortgage, you must fully understand that rate will revert to ARM levels at some point.

This means that you can count on a rapid and drastic increase in your monthly payment once loan goes back to a full adjustable rate basis. If you plan to stay in home for a very long time, your savings from locked in period will probably be wiped out when loan reverts to its adjustable status. You can consider a refinance, but that will also take some money out of your pocket. If you decide that you don’t want to sell property, keep in mind that overall, your loan will still be an excellent choice for your financial situation.

So which one really is better? If you’re going to stay in your home for 30 years or more then fixed rate loan will usually give you a better deal. As your income increases, you won’t have to worry about fluctuating payments so you can put any extra cash towards savings accounts and retirement funds. Otherwise, it depends on how you feel about your monthly payments. If you think that you can get a better deal by playing against market rate in hope that you’ll end up with much lower payments at some point, then you should get an adjustable rate loan.

Talk to a financial advisor or a loan officer about your concerns before decide to get most up to date options on both types of loans.