As a mortgage professional, I tell people that it’s just gambling to get a 5 YR ARM, unless you are 90% sure that you won’t have that loan in 6-7 years.
If you plan on keeping the property for more than 7 years, in my opinion it would be very foolish to get the ARM.
You cannot put a price on the stress that many people face because their ARM will be adjusting in 12-24 months. (Some are freaking out, as they don’t qualify for a refi today)
The security of a 30YR fixed is cheap insurance.
You have no idea what any of the following will be in 5 YRS:
a) Interest Rates
b) Property Value
c) Your credit score
d) Your ability to qualify for a loan
Mortgage rates are historically low NOW. WHY GAMBLE ?
(For .005% for only 5 yrs ?)
If you plan on keeping the property, you think that rates will be lower in 5 years ? Even if you are right then you have the added expense of refinancing again.
If you can predict interest rates, who cares what your mortgage rate is. You can make a fortune trading bonds on Wall Street and pay cash for your house.
At today’s rate, I don’t think that anybody is offering you a “no fee no cost” loan at 5.375%/5.875%.
Please correct me if I am wrong.
Do you understand that if you plan on keeping the loan for more than 4-5 years, getting the “no cost” loan is a poor decision ? There are no FREE loans. You pay a higher rate for the life of the loan.
FNMA 5 YR JC ARM’s are a HIGHER rate than 30 YR Fixed.
Yes it is dumb. (Cheaper 5 YR ARM’s are only available below $417K)
I cannot believe the number of people who want to play games with the largest financing decision of their lives, and some make choices based on the words out of a hotties mouth on CNBC or a misleading commercial.
