Lost in the euphoria over record low rates for 30- and 15-year fixed-rate mortgages is perhaps an even better alternative: adjustable mortgages.

Adjustable-rate mortgages get a bad rap, lumped as they often are in the "toxic" category with such infamous products as interest-only loans, negative amortization and no income, no asset mortgages.

But today's most popular ARMs -- called "hybrid" ARMs because they carry fixed rates for the first five or seven years, after which their rates begin adjusting annually -- are excellent deals for the proverbial "right" borrower.

That would be someone who knows he is going to move on -- either buy another house or refinance the current one -- before the fixed-rate portion of the ARM runs out. But as we'll see in a moment, the time frame until you are in the red with a hybrid ARM is actually somewhat longer.

According to mortgage intermediary Freddie Mac, the average for 30-year, fixed-rate mortgages in early June was a record low 3.75 percent. The following week, the average fell even more, to 3.67 percent. The rate for a typical 15-year loan was an astounding 2.9 percent. The 5/1 ARM was a tad cheaper at 2.8 percent.

But forget those rates. While they grabbed all the headlines, they aren't terribly realistic, because they are an average of what the "ideal" borrower would have to pay. And as everyone knows, ideal borrowers are few and far between.

So here's an analysis based on rates that lenders were actually quoting in early June on LendingTree, the online service where lenders bid for your business. It's based on an average of the offers quoted by lenders on $225,000 mortgages to borrowers with a 20 percent down payment and a FICO score of 720:

On a 30-year fixed loan, the typical LendingTree rate was 3.91 percent, resulting in a monthly principal and interest payment of $1,063. The 5/1 ARM was pegged at 2.75 percent, with a payment of $919.

As a result, the ARM borrower would pay $144 less each month for the first five years of the loan, for a total savings of $8,640.

So far, so good. But what happens when the adjustment period kicks in?

In the worst possible case, you wouldn't start losing money with the ARM in this example for more than seven years -- 91.4 months, to be exact. The reason: Adjustables come with protective annual and life-of-the-loan interest rate caps that typically limit adjustments to no more than 2 percentage points annually and no more than 6 points over the duration of the loan.

Consequently, in our example, under the worst of circumstances, the adjustable rate in year six would jump to 4.75 percent, while the fixed-rate would remain at 3.91 percent.

That means the payment from month 61 through month 72 would be $72 higher for the ARM -- $1,135 vs. $1,063. Over the 12-month period, you pay out $864 more for the ARM. But you'd still be ahead $7,776 because of the $8,640 you didn't have to pay in years one through five.

In year seven, the ARM rate might jump again, to as high as 6.75 percent, in which case your payment would rise to $1,368. In such a worst-case scenario, that's $305 more a month than the payment on the fixed loan.

But again, while you pay more, you're still ahead. Indeed, by the end of the loan's seventh year, your total payments with the ARM are $4,974 less than they would have been with the fixed loan.

Even if rates jump two more points in year eight, hitting 8.75 percent and the 6-point maximum, you wouldn't be a loser with this loan until the 91st month. At that point your payment will be $1,614, or $551 a month more than the payment on the fixed loan, and you've lost everything you saved.

Is this loan for you? If you are certain you are going to move within the first five years, absolutely. This kind of savings just can't be ignored, and there is no risk whatsoever. If you can afford the annual hits, you still have more than seven years to move or refinance before you lose money by not taking the fixed-rate loan.

So the ARM should rate at least a second look. Even with fixed rates at record low levels, says LendingTree's Doug Lebda, ARMs can be a "valuable risk-adjusted alternative."

A few more points to consider:

-- Only you know how long you are going to stay put. But according to the Census Bureau, Americans move or refinance every six or seven years on average. Are you the typical itinerant homeowner, or is this house where you plan to raise your kids and live until Middle Youth sets in?

-- Rates go down as well as up. That means there's always the possibility that once your rate tops out at the 6-point cap, it could drop again. The rate could recede even before it hits the maximum. Or it may never, ever go down.

Betting on interest rate movements is always a crapshoot. But with rates today as low as they are, the safe gamble is that they will rise from here. How high and for how long is anyone's guess. So if you have a low tolerance for this sort of thing, your timeline with a five-year ARM is exactly that, five years.

-- You'll receive a smaller tax break on the ARM because you'll pay less interest, at least initially. But mortgage interest is a costly out-of-pocket expense.

Moreover, the tax deduction is not a dollar-for-dollar writeoff. Rather, it is based on your tax bracket. So, if you are in the 18 percent bracket, you'll be able to claim only 18 cents for every dollar you spend in mortgage interest.

Under new guidelines set down by Fannie Mae and Freddie Mac, underwater borrowers who are seeking to sell their homes for less than what they owe must now receive decisions from their lenders within 60 business days. But if they are not careful, floundering borrowers can cause delays beyond the two-month deadline.

The new rules, which take effect June 15, apply only to loans owned or rolled into securities by Fannie and Freddie. But because the two mortgage giants are the main conduits between primary lenders and investors in mortgages, their precepts cut a wide swath.

More than 10 million homeowners are said to be underwater with their mortgages. Not all want to get out. Many are content with their current situations and have no intention of moving, at least for now. Others continue to hold on in hopes that values will start rising again.

Unfortunately, others need to go, and many of them would rather sell at a loss through a short sale -- a loss their lenders would have to absorb -- than have their homes taken away.

The new 60-day rule became necessary because lenders were taking an inordinate amount of time to make up their minds -- eight months on average at one point, according to RealtyTrac, a foreclosure data firm. It took so long to receive an answer that many would-be buyers became tired of waiting for a decision and went elsewhere.

But borrowers need to realize that the rules cut both ways. While lenders are required to adhere to faster timelines, borrowers also must do their part. Otherwise, they can short-circuit their own short sale.

A decision can be delayed, for example, if all the paperwork the lender requires has not been supplied. If something as simple as a photocopy of a driver's license is missing, a borrower might have to start the process over, says Steven Horne of Wingspan Portfolio Advisors, a firm that services nonperforming loans.

Consequently, Horne and others agree that the most important thing a borrower can do is engage the services of a real estate professional or attorney who has experience in short sales, preferably with their particular lender. Not to bash rookies, but now is not the time to allow someone to cut his or her teeth on a deal.

"The way short sales are packaged and presented by real estate agents is more than half the battle," says Ed Delgado of WREN, the Wingspan affiliate that trains agents on how to package their short sales to speed up the process and gain approvals. "The more agents understand about how the process works, the fewer the delays and the faster the closings."

Matthew Vernon of Bank of America, which maintains a roster of experienced agents on its website (agentlocator.bankofamerica.com), agrees. "We get agents who are still learning the short-sale business, and that's never a good thing."

One good reason to have an agent who has a working familiarity with short sales is that, unlike a regular sale, the short sale is basically a two-step process. It's important to understand which step comes first.

Some lenders work the traditional way: Find a buyer, bring us the deal and we'll make a decision. But other lenders want borrowers to approach them first, come to an agreement on an acceptable price, and then find buyers at that figure.

"With some lenders, you can't just randomly list your house," Delgado says. The short sale can still be done, he says, but the timeline for closing is longer. "Usually people blame the lender for that, but often it's their own doing."

Complete and accurate financial information is critical, and the quicker a borrower completes the requested paperwork, the faster action can be taken.

It goes without saying that all forms should be filled out legibly, preferably typed. Pages get faxed back and forth several times, so if something is handwritten in pencil, it eventually will become illegible.

One key document is the hardship letter, in which the borrower states in his own words why he needs to sell at a price that undercuts the lender. "You don't need a novel," just a step-by-step explanation of how you got into financial difficulty, says Karen Mayfield, national sales manager at Bank of the West in San Francisco.

"Be precise; be clear," Mayfield advises. "Offer a bullet-point list in your own hand of the events that led to your hardship. If the lender can't understand how you got into trouble, he may close your file and move on to the next one. Or he may suspect you are trying to pull a fast one."

That leads to another important point: Make sure the hardship letter matches up with all the other documents provided. Depending on the situation, those documents might include key medical records, a divorce decree or unemployment verification.

Other documents lenders may require include tax returns for the previous two years, bank statements for the previous two to six months, pay stubs for at least the previous 60 days, proof of residency in the form of a paid utility bill, a listing agreement and a third-party authorization allowing the lender to deal with the agent.

Gee Dunsten, a Salisbury, Md., agent and popular sales trainer, binds all these documents behind a cover letter and table of contents that "lets the lender know right away that everything it needs is included."

At some point in the short sale, borrowers have to justify the selling price, backing it up with a broker's price opinion or perhaps even an appraisal, a history of the listing that shows attempts to sell at a higher price, a report listing sales of other houses in the neighborhood, a sales contract with a preapproval letter from the buyer's lender and verification of his earnest money deposit and funds to close.

On top of these documents, Dunsten likes to write a personal letter to his client's lender explaining the intricacies of the sale. "When it comes to short sales," he advises other agents, "the devil truly is in the details."

In many parts of the country, and in most price ranges, the best properties are suddenly piling up offers from multiple bidders who know a good thing when they see one. But sometimes the highest offer isn't the one that's accepted.

Here, courtesy of dozens of real estate professionals across the country, is a cornucopia of creative tactics that could help you win the day when you can't go any higher on price.

-- No strings attached: Make your offer as clean as possible by removing every contingency you can live without. Line up your financing in advance so the sale won't be dependent on securing a mortgage. Conditioning the deal on the sale of your current house is the kiss of death.

If you feel confident enough, you can even waive the appraisal contingency. But realize that without that protection, if the valuation comes in low, you'll have to make up the difference between the agreed-upon selling price and the appraised value.

Agents have differing opinions on waiving the inspection clause. Some think it's OK to go commando, but others say it is too dangerous.

If you want an inspection, line up your inspector in advance and offer to get it done fast -- say, in five days instead of the usual 10. That way, says Jonathan Osman of Keller Williams Realty in Charlotte, N.C., if there is a problem that kills your deal, it will be discovered soon enough that the seller can accept another offer.

Also, be sure all the required documents, filled out nicely with no erasures, are submitted with your initial offer. "No mistakes or weird language," advises Steve Crossland of Crossland Real Estate in Austin, Texas. "Make your offer acceptable and ready to sign."

-- As-is condition: Offer to take the place as is. You can still have it inspected and cancel the deal if the exam uncovers something you find unacceptable. But once the inspection period expires, with an as-is clause, the place is yours.

-- Speedy closing: Some sellers want out as soon as humanly possible, so offer to close quickly. One winning deal offered to settle within 24 hours. Of course, that wasn't possible; it takes several days to prepare the closing papers. But the offer to settle the next day told the seller the buyer was ready to go.

A quick close "is worth money and peace of mind" to many sellers, says Linda Walters of Sage Realty in Wayne, Pa. Adds Ed Corbett of Keller Williams Realty in Atlanta: "Lengthy contract periods tend to make sellers nervous since their period of risk is longer."

-- Going long: Some sellers might have a much longer time horizon. So instead of a quick deal, offer to hold off the closing for 90 days instead of the usual 30 or 45. "If you can afford to be flexible on closing dates, that can be a great asset," advises Debbie Battista of Domus Realtors in North Haven, Conn.

-- The personal touch: Write a heartfelt letter telling the seller who you are, why you love the property and how you will cherish it as your own. Write it by hand, and include a photo of your family.

Corny? You bet, but it works. "Sellers want to know that the buyers will love the home as much as they have, and that their efforts to maintain it are appreciated," says Susan Neal of Century 21 Noel David Realty in Fair Oaks, Calif. "I've seen sellers turn down a higher offer to leave their homes in good hands."

-- Face to face: Some agents want the buyer and seller to meet, to get to know each other. At the very least, your agent should present your offer to the buyer directly rather than just handing it over to the seller's agent.

"It's my job to make the seller fall in love with my buyer," says Diane Hughes of the Higgins Group Realtors in Bedford, Mass. "It's a people business," agrees Dorene Slavitz of the Real Estate Group in Culver City, Calif. "If the owners like your client, that can have a positive effect upon their view of your offer."

-- Timing is everything: Sometimes the earliest offer wins the day, especially with anxious sellers who want out quickly with no muss, no fuss.

Kevin Kieffer, a Keller Williams agent in Danville, Calif., likes to submit his offers midweek to beat the competition that shows up on the weekend. Barry and Serene Sulpor of Shorewood Realtors in Manhattan Beach, Calif., work the realty grapevine, and when they hear of a place that might be coming on the market, they quickly contact the listing agent, have their client preview the place and, if they like it, enter a bid.

-- Think big: A typical earnest money deposit is 1 percent of the purchase price, so offer more. This gets the seller's attention, tells him you have the financial wherewithal to follow through and shows him you're serious.

If you really, really want the place, Mark Ruff, a Keller Williams agent in Studio City, Calif., suggests offering to make your deposit nonrefundable -- but applicable to the purchase price -- after the physical inspection period expires.

-- Ducks in a row: It should go without saying that you should be preapproved for financing. Many agents advise their clients to attach a copy of their approval letters to their offers. Some even suggest including bank statements or other proof that you have the funds you'll need to close.

Debra Kroon of Yosemite West Real Estate in Oakhurst, Calif., suggests buyers pick a lender with a reputation for delivering. "A preapproval letter from a lender that the listing agent can vouch for as being reliable will have more impact than one from an unreliable lender or a lender unknown to the listing agent," Kroon says.

Greg Kilroy of Keller Williams Paradise Valley in Scottsdale, Ariz., asks the buyer's lender to call the listing agent "to give him a warm feeling" about his client's ability to obtain funding.

-- Back at ya: To make their move less stressful, offer to allow the sellers to stay on after the close for as long as they need. You can charge them rent, based perhaps on a percentage of your house payment. If you are really feeling magnanimous, let them stay free to clean up loose ends for, what, 30 days?

-- Adoption: If the seller has a pet that he can't take with him, offer to take the pet as well as the house. Ann Wilkins of East Bay Sotheby's International Realty in Oakland, Calif., reports that one of her clients once agreed to adopt chickens as part of the deal. Similarly, Ralph Gorgoglione of California Real Estate in Los Angeles suggests taking over or buying personal property such as a piano that would be too difficult or costly for the seller to move. And Kathryn Copeland of Coldwell Banker Residential in Winter Park, Fla., suggests that offering to keep on gardeners or longtime housekeepers who might otherwise be displaced might tip the scales in your favor.

-- Pay to play: Jim Mellen of RE/MAX Peninsula in Williamsburg, Va., had a client offer to pay some of the seller's moving expenses. A client of Alex Cortez at Island Sotheby's International in Maui offered to allow the seller to come back and use his former vacation property at predetermined times every year.

-- Hang in there: If your contract isn't accepted, ask to remain as a backup in case the other deal falls through, says Christy Walker of RE/MAX Signature in Phoenix, who notes that for one reason or another, more than one in every four contracts fail to close in her market.

Seventeen times last year, Charlotte agent Osman "sold" one of his listings two or more times. "You never know," he says. "The buyer could walk, get divorced mid-contract, lose his job, misstate his assets or income, or lose interest."