Quote:
Originally Posted by mike052082
You guys are not focused on the question.
There is no mortgage fraud. Actually the bank that financed my first home is doing the second. They know it will be a rental property and I have changed my insurance to reflect that.
My question is, which I think I answered today while thinking about it, is "Is it worth it to try to get into a 30 year fixed loan now instead of in a year or two?"
The first home is worth about $185k and I owe $160k on it. It is a 5/1 ARM bought six years ago and at 4.75. The second home is $215k and will be 5/1 ARM at 4.5.
I'm not sure what you mean by Jumbo loans. I'd have to look that up.
|
Maybe I'm not understanding the timing. I thought the question is should your refinance existing current home. You are closing your new home as a owner occupied mortgage. You are conteplating doing another owner occupied mortgage on your existing home when you know it will be rented out within a year?
The current 4.75% seems a little high for an adjustable especially since you can get a 4.5 today. Your friend is right, it will be harder for you to refinance in a year after you move out since it will be a rental property and require more equity and a lower LTV. At the same time, it should be hard for you to refinance today since it will PROBABLY be consider an investment property and you only have 10% equity on the rental.
What you might want to consider is putting less down on the new home, paying down more on the rental property so you have the flexibility to refinance it in the future or get a second on the new home so the cash is available when you need it.
Refinancing a current residence that will be turned into a rental usually should be done a year in advance.
The idea of a rental home on it's current yearly adjustable is a something that is hard to stomach and you might have a hard time sleeping at night. Are you willing to sell it when rates go up, prices go down, and you are now either upside down on the mortgage payment or value? If you are, keep the adjustable, otherwise go to a fixed if you want to keep it long term.
If you are asking if the new home should be a fixed 30 or an ARM, unless you are planning on either moving in 5 years again or paying down extra on the rental, I'd do the 30 year fixed.