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08-17-2008, 05:40 PM
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Senior Member
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Join Date: Jun 2008
113 posts, read 83,877 times
Reputation: 29
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5/1 and 7/1 ARM mortgages
Are these good options in this market? I'm really scared of the future. I heard it was 18% at some time in 80s.
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08-17-2008, 06:02 PM
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L.U.S.T. Girl
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Join Date: Jan 2008
Location: Stewartsville, NJ
7,581 posts, read 4,927,754 times
Reputation: 894
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Quote:
Originally Posted by skapur
Are these good options in this market? I'm really scared of the future. I heard it was 18% at some time in 80s.
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How long do you plan on staying in the home? I don't like arms. I always go with a fixed rate. It's those that went with an arm who are having issues now...can't sell and the rate keeps going up! Can't refi because the value of the house is less than what they owe. Too risky... the rates are low enough now that a fixed rate makes more sense. |
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08-17-2008, 06:18 PM
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Senior Member
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Join Date: Aug 2006
2,345 posts, read 1,604,046 times
Reputation: 636
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An ARM is good if you know for a fact that you'll be out of the house before it adjusts or if you like to roll the dice.
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08-17-2008, 07:39 PM
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Real Estate Agent
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Join Date: Feb 2008
Location: Cranford NJ
414 posts, read 298,852 times
Reputation: 91
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I've had an adjustable rate mortgage on one of my properties for close to 15 years, my current rate is 4.34 % what are you paying on a fixed rate?
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08-17-2008, 08:26 PM
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Senior Member
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Join Date: Jun 2008
113 posts, read 83,877 times
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30-year 6.50
5/1 ARM 5.90
7/1 ARM 6.12
I'm looking at minimum 7-10 years stay in the house
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08-17-2008, 08:37 PM
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Senior Member
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Join Date: Aug 2006
2,345 posts, read 1,604,046 times
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I've even seen an ARM for 10 years at 6.125%.
If interested please PM me and I'll let you know from whom.
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08-18-2008, 06:11 AM
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Real Estate Agent
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Join Date: Feb 2008
Location: Cranford NJ
414 posts, read 298,852 times
Reputation: 91
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Over the long term you'll do better with the ARM. Why lock yourself in a 5 year fixed? Interest rates will climb a little, however, they cannot skyrocket. Everytime I thought about refinancing my mortgage, the rates adjusted and I was well below the prevailing fixed rates.
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08-18-2008, 02:49 PM
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Member
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Join Date: Jun 2008
80 posts, read 38,177 times
Reputation: 20
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Quote:
30-year 6.50
5/1 ARM 5.90
7/1 ARM 6.12
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Those number are meanginless unless you account for points, caps. One 5/1 ARM doesn't necessary equal another 5/1 ARM. A 2%/year cap for a 5/1 ARM, you won't see 18% for a while.
Also understand the advantages/disadvantages of ARM versus fixed. Neither is a solution for all.
Here is a 5.625% 5/5 ARM that has a 2% increase cap out at 10.625%
https://www.penfed.org/productsAndRa...gageCenter.asp |
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08-18-2008, 02:55 PM
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Senior Member
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Join Date: Oct 2007
149 posts, read 131,708 times
Reputation: 67
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Why can't rates go to double digits in the next few years?
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08-18-2008, 03:10 PM
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Member
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Join Date: Jun 2008
80 posts, read 38,177 times
Reputation: 20
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Quote:
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Why can't rates go to double digits in the next few years?
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They can't based on your loan agreement.
With the special running at Penfed, 5.625% 5/5 ARM terms are:
5.625% first 5 years
For year 6-10, Max rate is 7.625% (with the 2% cap)
For year 11-15, Max rate is 9.625% (with 2 % cap)
For year 16-20, Max rate is 10.625% (max lifetime increase of 5% of initial rate) |
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