re: Shopping for mortgage: ARM vs fixed?

5/1 and 5/6 pretty much serve the same purpose.

60 months fixed rate.
The difference being the adjustments thereafter (annual adjustment or 6 month adjustment).

If you feel a high chance that rates go down, you will benefit one of 3 ways.

1) lower 60 month rate than traditional 30/15 year fixed. You immediately win.

2) rates drop and you refinance into a better rate (i.e. you are using the first mortgage for under 30 years and take advantage of a lower cost to borrow prior to the refinance)
Why pay more for 30 year security when no one ever keeps a mortgage for 30 years maturity? The average duration of a mortgage is just over 4 years.

3) rates drop and after 60 months, you let the arm drop your rate even lower than it started without having to refinance.

Personally, I look to lock in my "equity gains".
If I take an arm, I still make the monthly payment on the 15 year or 30 year fixed. Even if rates go up after 60 months, I am ahead of the game with a lower principle balance and the odds are that the rates will eventually come down.

I hope that plots out some options for you. Good luck.