Is a porta-mortgage for you?

E-Trade has introduced a portable mortgage. You can transfer the fixed-rate loan from one home to the next.

The portable home loan, called Mortgage on the Move, is targeted at the home buyer who plans to sell the house within a few years to buy another. Typically, such a home buyer is best served by an adjustable-rate mortgage.

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"Here's the concept: Rates are at 40-year lows," says Robert Bernabe, vice president of retail mortgage lending for E-Trade. "Experts predict increases within a range over the next three to seven years, some significant -- 8, 9 percent. The concept is for a consumer who is interested in viewing their long-term cost of housing over their next two properties. This gives them the opportunity to lock in these 40-year lows."

The key phrase is "long-term cost of housing over the next two properties." For the portable mortgage to make financial sense, you have to think long-term and you have to transfer the loan to another house after rates have risen a lot. It's not a good deal otherwise, because the interest rate is higher than the borrower would pay on a non-portable loan.

The Mortgage on the Move comes with a long list of qualifications. It's for purchases only, and not for refinances. It's available on loans from $60,000 to $1 million. The loan can be transferred one time. It's available to people with good credit who will make the home their primary residence and who make a down payment of at least 20 percent.

Borrowers who want to transfer the mortgage to a more expensive house can either pay the difference in cash or get a second mortgage. Borrowers who move to less-expensive houses get the difference in cash, and the loan balance is paid off over the remaining term.

Lenders occasionally experiment with portable mortgages, but they have never caught on. No secondary market exists for them, which means that lenders have to keep the loans on their books instead of bundling them together and selling them to investors.

To make hanging onto the loans worthwhile, E-Trade charges a premium for the portable mortgage of 0.375 percentage point above the rate for a jumbo mortgage. And E-Trade's rates for jumbo mortgages (loans of more than $322,700) are about one-quarter point higher than for conforming mortgages (loans of $322,700 or less).

This means that E-Trade was charging 5.75 percent on a portable mortgage while it was charging around 5.125 percent for a fixed-rate conforming loan, and less than 3.75 percent for a 5-year adjustable-rate mortgage (one with an initial rate that lasts five years, and which adjusts annually thereafter).

On the face of it, that doesn't look like a good deal, but Bernabe stresses that "we're talking about below 6 percent for two properties."

Anthony Hsieh, president of competitor HomeLoanCenter.com, says the Mortgage on the Move "is a great idea, and I think there's a value associated with it." But he says the rates are too high for the mortgage to attract many customers. Many home buyers are convinced that low mortgage rates will hang around for a few more years.

But not everyone has such a sunny outlook. The portable mortgage "gives peace of mind to consumers who are worriers," Bernabe says -- those who believe rates will rise, sharply, in the next few years.

He outlines a scenario in which a family gets a five-year adjustable. Five years later, when fixed rates are 8 percent, the family moves to another house. That family could be stuck with an 8 percent mortgage (unless it takes out another adjustable) on the second house while paying the full spectrum of closing costs. With the 30-year fixed-rate portable mortgage, the family would still have a loan at less than 6 percent, and the closing costs would be less. They would have the same 5-year-old mortgage, with 25 years of payments due.

You could bang away at a calculator to figure which is the better deal in the long run, but that's almost beside the point. As Bernabe describes it, the portable mortgage is less about dollars and sense and more about feeling in control.

A borrower could always take out a series of five-year adjustables, Bernabe says, "but at some point, aren't you interested in locking in that fixed rate and controlling your cost of housing?" He adds that homeowners who get low-rate ARMs often "start to live in the manner according to the money they're saving" and get blindsided when their rates increase sharply upward.