Not a good program if you think rates are going to increase over the next few years. A good combination of fixed rate security and low starting rate. Great program for Jumbo loans and those who plan on being in a home for 3 to 5 years. Good program for anyone who believes that rates will be lower at some point in the next five years. Great program for borrower planning on paying off loan or relocating in five years or less.
Program can have extremely low rates with modest point buy-down.
At times has a lower rate than the 30 Year fixed. Fixed rate security for seven years is usually more than most borrowers need, at a rate better than the 30 year fixed. The adjustment after the seventh year usually yields a high rate. A good mix of security and low rate for those planning on being in a loan for seven years or less.