Looking Around For The Best Adjustable Rate Mortgage

From the Washington Post:

The global financial crisis has affected virtually every aspect of personal finance, from mortgages to student loans to credit cards to retirement savings. So it's no surprise that so many of our readers have so many questions.

Our first one comes from Luis Frank Torres, a 36-year-old attorney in the District. When Torres refinanced his Georgetown home in 2005, he got a five-year, adjustable-rate jumbo mortgage. (It's a jumbo because it's above $417,000. Until this year, government-backed lenders Fannie Mae and Freddie Mac guaranteed loans only up to that point. Their limit has temporarily been raised, though.)

Torres's adjustable made sense at the time because the interest rate was so low — 5.375 percent. He loves the four-bedroom house, which he bought in 2004, and has no problem making the payments. "The mortgage fulfilled its purpose at the time," he said. "I think that rate I got was a very good rate, especially compared to what I'm seeing now."

Now, as he watches the housing market crumble, lenders tighten their standards, and mortgage rates rise and fall, he wonders: What will happen when he has to refinance in 2010? Will the interest rate be sky-high? Will there still be a credit crunch, which has led banks to hoard their money? Will jumbo loans, which have been so hard to get because Fannie Mae and Freddie Mac wouldn't back them, still be as expensive as they have been lately?