U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 01-27-2013, 04:36 PM
 
Location: Morgantown, WV
1,000 posts, read 2,205,397 times
Reputation: 994

Advertisements

I'm buying a property that doesn't fit into secondary market guidelines due to some completely idiotic technicalities...but, my options for financing are a 15/30 Balloon loan at 4.00% and then a 5/1 ARM at 3.24%. It's a first home, and I don't necessarily see myself staying for the long run like most people...but I don't see it as a definite/concrete move that I would be looking to resale in 5 years for sure. If I had to guess, I would think that I would be living in it for a 5-10 year window.

Considering the above, which of the two options would you take? The 5/1 ARM would save me money in the short term...but if I'm still living in this property after 5 years, I'm somewhat scared that it would hurt me in the long run.

Thoughts?
Rate this post positively Reply With Quote Quick reply to this message

 
Old 01-28-2013, 01:43 AM
 
3,805 posts, read 8,879,915 times
Reputation: 4976
Is it a non-warrantable condo? If so, or if the condition that requires alternative financing is one that might be cured in a few years, the ARM seems ok, but how big is the loan? for a loan of less than, say $200k or so, I would go with the Balloon for more peace of mind, send a little more $$ every month, maybe pay bi-weekly, and create a larger equity cushion faster.

What's the worst case scenario with the ARM, it goes up a full point in that first year? That will negate your savings over the balloon.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-28-2013, 03:03 PM
 
Location: Morgantown, WV
1,000 posts, read 2,205,397 times
Reputation: 994
Yeah...the loan is at $92k with $23k down. The differenace is a payment of $399 vs $439...not exactly anything too crazy. I'm leaning towards the balloon loan and paying everything off by the expiration, that's if I don't sell and move into a different property by the expiration date.

Worst case is upon year 6, I believe a 1% increase with 2% Max increases afterwards each following year. The overall cap would be set at 8.24% as a long term worst case situation. I'm guessing the years 1-5 savings will be negated during years 5-10.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 01-28-2013, 07:37 PM
 
3,805 posts, read 8,879,915 times
Reputation: 4976
I'd go for the peace-of-mind play. So is it an unwarrantable condo or something?
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Similar Threads

All times are GMT -6. The time now is 11:13 PM.

© 2005-2022, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top