Conventional wisdom says mortgage shoppers should grab fixed-rate mortgages now, while rates are low. It's not that simple, even for people who plan to own their houses for a long time.

"You can't just look at it as, 'Thirty-year rates are good, I'm going to get a 30-year,'" says Neil Sweren, a broker for Allymac Mortgage Services in Baltimore. "You have to look at the needs of the individual, and sometimes conventional wisdom makes sense, and sometimes conventional wisdom -- you can throw it out the window.

"A 30-year fixed is great if you're going to be in the house for a long time, but I like to say it's like buying a school bus to carry around your family of four," Sweren adds. In other words, sometimes an adjustable-rate mortgage, or ARM, is all you need.

A temporary solution
Whether you're buying or refinancing, consider an ARM if don't plan to own the house for long, or if you're going through a temporary period of lower income or higher expenses and you need as much spending money as possible in the meantime.

ARMs' attractiveness comes from their lower rates. Lately, rates on one-year ARMs have run about 1.75 percentage points less than 30-year fixed mortgages. Rates on three-year and five-year ARMs run somewhere between.

ARMs carry risk because rates can rise. If you get a one-year ARM at 4.75 percent instead of getting a 30-year fixed-rate mortgage at 6.5 percent, you'll save lots of money in the first year.

But if rates rise during that year, the ARM rate could adjust to, say, 6.75 percent, and your monthly payments will increase. A year later, the ARM rate could rise again, and so could payments. Meanwhile, your neighbor who got the fixed rate is still making the same monthly payments at an enviable 6.5 percent.

The same can happen with three-year and five-year ARMs. After you make monthly payments at a low rate for three or five years, the rate adjusts annually and so do payments.

A rule of thumb says that the longer you intend to keep the house, the more sense it makes to get a fixed-rate mortgage.

"You've got to be fairly confident that you're going to stay in your house and not move under any circumstances," says Larry Goldstone, CEO of Santa Fe-based Thornburg Mortgage, an ARM specialist. "That means no job changes, no neighborhood changes, no moving up, no nothing."

Other reasons to reach for an ARM
In one common situation, it doesn't matter that rates on adjustables could rise someday.

"Let's suppose you're an executive who's moving every three to five years. That would be an excellent ARM opportunity," says John Sestina, a fee-only financial planner in Columbus, Ohio.

You don't have to be an oft-transferred employee for ARMs to make sense. Maybe you're a doctor and your residency will end in a few years, and you plan to move to another house when the bigger bucks roll in. Maybe you'll be an empty nester soon and you plan to sell the house and buy a smaller dwelling.

Even if you plan on staying in your house for a long time, it might make sense to get an adjustable-rate mortgage if money is tight temporarily. This could be the case if you are paying for college, Sweren says.

Homeowners might consider ARMs to free up money for other kinds of temporary costs: debt-payment plans, child-support, alimony, nursing care for infirm parents and so on.

Other homeowners deal with the other side of the coin: Instead of paying temporary costs, they live on temporarily reduced income. Such might be the case when a married, working parent relinquishes a full-time job to be with the children for a few years, or when an ambitious person feels confident or earning a lot more money in the future. Those people should consider ARMs, too.