APR vs Fixed rate

We are in the process of buying a condo and I am a little unclear on what to do...and figured you girls would have the answers for me...


we only plan on staying in the condo for 2-3 years (just enough to avoid capital gains) so does that mean that the APR is the best loan for us?

our rate would be 4.2% vs 6.5% fixed...although I am not clear on what the difference is between the 3/1 ARM and the 5/1 ARM

is the best thing to make sure that it doesn't change rates for 12 mo (since rates are rising) and not more than .5%...so that by the 2 year it could only be 5.2%?


thanks for any help you guys can give!!

I did an adjustable rate (just this past week) I believe the 3/1 means locked for three years vs. 5/1 locked for 5 years - however, don't quote me on it...
All I know is I have a rate that is locked in for 5 years can't change until then -
Yes, if you don't plan on staying in the condo - you should NOT take a fixed rate and pay more -

We just bought our home a couple of months ago and did a 5/1 Adjustable. Since we don't plan on staying in the house for more than 5 years it made no sense for us to lock into a rate for 30 years. When we bought the fixed rate was about 6%, but with the 5/1 ARM it was 4.5%. Much more practical for us. So what that means is that we will have a rate of 4.5% for the first 5 years and then it will fluctuate every year. There is a cap on how much it can go up or down each year after the 5th year.

The 3/1 is the same as the five, but your rate is fixed for 3 years. Seems that either that one or the 5/1 will make sense for you guys.

ok...thats what I thought...but when I tried to figure it out with one of these online mortgage calcs...they said that it couldn't go more than 12 months...so I became very confused!!

that makes me feel so much better

I am NOT a fan of APR. Here is why? Right now, things are low but those rates can rise and you don't know how high either. You can always refinance in a few years if the rates go much lower but I wouldn't take the chance that next year your mortage is much higher. APR is great for investor properties that are looking for a quick out and higher return on their money.
I know lots of people who thought they would be out of their current homes in a few years and are still there because of the high housing costs. So it is hard to know where you are really going to be then.
Both of my parents are in the mortage industry and tell me to never get a APR mortgage.