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All indications point to rates to go up in 2014:

• The Federal Reserve already is on course to reduce its monthly purchases of mortgage bonds and treasury securities by $10 billion per month.
• The economy appears to be recovering albeit not to the Fed's expectation.
• New federal regulations aimed at preventing another burst take effect on Jan. 10th requiring lenders to scrutinize income, debt ratios and credit. Marginal borrowers may be charged higher rates to compensate for higher risks.

Some economists predict that conventional 30 year fixed may go up to 5.5% by end of 2014. It is still a bargain - considering that it was 9.19% in 1974, 13.88% in 1984 and 5.84% in 2008.

Why Adjustable Rate Mortgages (ARMs) may benefit you:

• If your time horizon to stay in that house is only for a few years, getting a 3, 5, 7 or 10 year fixed may save you hundreds of dollars per month.
• In general rates for ARMs are about 1% lower than 30 Year Fixed. That translates to higher purchasing power and to remain within allowable debt ratios.
• If you anticipate a promotion with salary increases - ARM is a good program to get you the dream house that you may not be able to qualify with conventional 30 year fixed.

Per chance if you are still holding the ARM when the note resets, here's what will happen. As your loan originator - I will go over all of your loan options for review.  Here's more information from CFPB on CHARM booklet.