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After the recent jump in mortgage rates, are adjustable-rate loans worth a look?

For months most experts have urged borrowers to avoid ARMs and jump on the rare opportunity to lock in fixed-rate mortgages charging 5% or less.

But in the past week rates on 30-year fixed loans have leapt to just over 5.5%, according to the BankingMyWay.com survey. That pushes monthly payments up, perhaps to the point where you might not qualify for enough to refinance or buy the home you want.

With a one-year ARM (http://www.bankingmyway.com/real-estate/mortgages/arm-right-you), you can still get a rate around 5%, perhaps lower if you look around with the shopping tool. TD Bank (Stock Quote: TD), for instance, offers a one-year ARM charging just under 3.6%, while AIG Bank (Stock Quote: AIG) has a five-year ARM charging just over 4.4%.

A five-year ARM keeps its initial rate for five years, a one-year ARM for one year, and so forth. There also are three-year, seven-year and 10-year ARMs.

After the initial period, the rate changes, typically every 12 months, by adding a set number of percentage points, a “margin,” to an underlying “index,” such as the interest rate on U.S. Treasury bills with one year to maturity.

Obviously, the upfront saving furnished by an ARM is offset by the risk you’ll have to pay a higher rate later.

Most experts say you have to save at least 2 percentage points at the start to make that risk worth taking. With fixed-rate loans at 5.5%, an ARM should start at 3.5% or lower before it’s worth a look.

While that’s a pretty good rule of thumb, it’s not iron clad. Borrowers with a stomach for risk may be attracted to ARMs because there’s a chance they’ll pay less over the long term than with a fixed-rate loan.

To assess those odds, you have to know details such as the ARM’s margin, its guiding index and the “caps” which determine the maximum rate changes you could face in any one year and over the life of the loan.

The classic one-year ARM adjusts by adding 2.75 percentage points to the one-year Treasury, with caps of 2 percentage points a year and 6 points over the loan’s life.

With the one-year Treasury now yielding a meager 0.5%, one of these ARMs, if taken out a year ago or longer, would adjust to 3.5%, assuming the annual cap didn’t keep it higher.

While that would be a good deal, a new one-year ARM starting at 5% could someday go to 1 % if it had a 6-point lifetime cap. If that happened, you’d probably regret not locking into a fixed-rate loan at 5.5%.

Look at it this way: For this ARM to continually charge less than the 5.5% you can get on a fixed loan, the one-year Treasury would have to stay below 2.75%.

In fact, data from the Federal Reserve shows that the one-year Treasury has been higher than 2.75% most of the time since the early 1960s. The exceptions have come in this decade, when they Fed drove rates to stunning lows to combat the dot-com collapse and the current financial crisis.

With the economy showing signs of recovery, many experts think the Fed will begin raising rates over the next few months. Just how high they will go is anyone’s guess.

Before gambling on an ARM, use the Arm vs. Fixed Rate Mortgage calculator to compare payments. Don’t choose an ARM unless you are certain you could afford the payments if the rate adjusts to the highest level allowed.

For more smart ways to save, spend, invest and borrow, visit MainStreet.com.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.