The point of an ARM is to get out and cash out your equity or refi into a conventional. It's also entirely possible that every other bank out there can beat your credit union. Credit unions, because they're membership-owned, have a fiduciary responsibility to their members and they are estimating risk appropriately. Banks, on the other hand, can sell your mortgage to someone else and tranche it up and treat it like a security (AND NOTHING BAD WILL HAPPEN). I don't think interest rates are going anywhere anytime soon. It's not a bad time to ARM it. Just keep in mind that if you make your minimum payment you're paying interest and every penny above that goes to principal. If you can pay anything above minimum you will build equity much faster.