Planning on an ARM? (loan, fixed rate, 30 year, rate)

[thelopez2]

ARM rates are pretty low right now. With current guidelines it will be hard to get out of your ARM during the fixed rate period. Lets say you took a 2.5% 5 year arm, with the current fixed 30 at 4%. If the 30 year jumps to 5.5% and you get cold feet and you want to jump to a 30 year fixed because you are scare of the 8% arm in the future, it won't be so easy. With the payment jump, lenders won't see it as a benefit to you and deny you.

[TimtheGuy]

Originally Posted by thelopez2

ARM rates are pretty low right now. With current guidelines it will be hard to get out of your ARM during the fixed rate period. Lets say you took a 2.5% 5 year arm, with the current fixed 30 at 4%. If the 30 year jumps to 5.5% and you get cold feet and you want to jump to a 30 year fixed because you are scare of the 8% arm in the future, it won't be so easy. With the payment jump, lenders won't see it as a benefit to you and deny you.

Isn't it always considered 'borrower is benefiting' when going from an ARM to fixed?

[thelopez2]

Originally Posted by TimtheGuy

Isn't it always considered 'borrower is benefiting' when going from an ARM to fixed?

Nope, only when it is a year from adjusting. I hope they change it so people can get out before it is too late. Interest only or NegAm to fixed is another story. They wanted to stop the loan churning. Example going from 2.5% to 4% to 2.5% to 4% to 2.5% to 4%, every month.