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Why are you so sure the rate will be 4.5% after 12 months? It might remain at 2.5% mark. Topic starter just said it cannot be higher than 4.5% after 12 months, and never higher than 7.5%.
There are many reasons why people prefer adj rates...
I am not sure. I always thinks its prudent to plan for the worst this way your never suprised how this could happen. We all are different in how we view these things, you must factor that when people make comments.
Sure there are reasons, I just dont see how 2.5% for a year with any risk of 4.5% is better then 30yr fixed at 3.5% or even 3.75%.
Sure there are reasons, I just dont see how 2.5% for a year with any risk of 4.5% is better then 30yr fixed at 3.5% or even 3.75%.
Let's look at a scenario of a $400,000 loan and you know you are going to sell in two years because you already have another home,need a another house, moving out of the country, in it for the short term. 1% is 4,000. This is just an example and not the OP scenario, I don't know if the OP is self employed doing a stated income loan with 85% LTV on a Condo. Maybe the OP's bank is giving them something special. Also it look like penfed has something equivalent to prepayment penalty for closing cost for 36 months.
What if it was a loan for $1,000,000 , that is $10,000 that you are leaving on the table when you know you are going to move in the next 2 years.
Last edited by thelopez2; 09-26-2013 at 02:02 PM..
Let's look at a scenario of a $400,000 loan and you know you are going to sell in two years because you already have another home,need a another house, moving out of the country, in it for the short term. 1% is 4,000. This is just an example and not the OP scenario, I don't know if the OP is self employed doing a stated income loan with 85% LTV on a Condo. Maybe the OP's bank is giving them something special. Also it look like penfed has something equivalent to prepayment penalty for closing cost for 36 months.
The attractive part about Penfed is that they pay for the closing cost and the total is divided into 36 months. If you close the loan prior to 36 months, you pay the pro-rated amount as a penalty. What's nice about the their ARM product is that there is no origination fee.
Let's look at a scenario of a $400,000 loan and you know you are going to sell in two years because you already have another home,need a another house, moving out of the country, in it for the short term. 1% is 4,000. This is just an example and not the OP scenario, I don't know if the OP is self employed doing a stated income loan with 85% LTV on a Condo. Maybe the OP's bank is giving them something special. Also it look like penfed has something equivalent to prepayment penalty for closing cost for 36 months.
What if it was a loan for $1,000,000 , that is $10,000 that you are leaving on the table when you know you are going to move in the next 2 years.
I can see what your saying, not my buying style so I didnt think about that angle.
I can see what your saying, not my buying style so I didnt think about that angle.
Yes my style is different . I have never rented in my life and I'll live in "up and coming" neighborhoods. Like I said my style is different than most.
It is there an HOA, once completed would it fall under current conforming guidelines? Other than value, would there be any reason you can't refinance it in the future? Are questions you should find the answer for.
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