not certain if this is the solution to your problem but what i suggest doing for Americans who have credit problems is to check their credit score and report regularly. see if interests you.

fixed 5.

Go with the 5% fixed rate. An adjustable rate mortgage is NEVER wise; you can end up losing your home too easily. With the 5% fixed rate, you know what your payments will be each month. And, there’s nothing to prevent you from refinancing to a lower Fixed Rate in the future should interest rates drop. Part of the reason for the current mortgage crisis is ARM mortgages which have increased in % rate to the point that people can’t afford the higher payments.

5% is a darned good fixed rate. Always check with your current mortgage holder first; they will often offer you a better rate to keep you as a customer. Under NO circumstances should you hire a mortgage broker (he/she can’t do anything you can’t do yourself for free) and avoid ARM mortgages like the plague no matter how attractive they may sound. It’s financial suicide.

Why?
For most, an adjustable mortgage loan is foolish.
I would go for the fixed @ 5%.

The problem with your 5/1 is that if for some reason you don’t sell before the end of the loan (5 years) your interest rate could reset to something you might not like.

Unless you are a gambler, or an astute property investor, I would stay far away from adjustable loans.

If you sign an arm loan, you are not gauranteed to be able to refinance at the end of 5 years. I wouldn’t recommend one since things are bad now, what will they be like in 5 years? You never know, you may have to finance the balance at a much higher rate or not be able to finance at all. Then what? Hard to predict the future.