Hello,
I am planning to buy a house and would like to know the benefits and suitability of an Adjustable Rate Mortgage loan. Does any one have any idea? Thanks in advance!
I'd say steer clear. I think ARMs are responsible for the current mortgage crisis.
I'd say steer clear. I think ARMs are responsible for the current mortgage crisis.
Could depend on the ARM.
I've got a 5/1 about to reset late next year. Certainly, it is a weight on my mind at present but I kind of knew that going into it and the five years it bought me with a low mortgage payment really made a huge difference.
The rate I got four something years ago was less than half the current interest rate so as you can imagine, it will be a shock when it resets. However, I know it won't bankrupt me and there are options such as asking for an adjustment, refinancing again (which I can do as I have good credit, unlike most of those that are caught out with the current problem in the news) or perhaps just getting into the government bail-out scheme which is set to run through next year at least.
For now, I am staying with my low rate until the bitter end of the five years. Nearer the reset point, I'll make a decision as to what to do. On the plus side, if I refinance, I won't have to pay PMI any more and the mortgaged amount will obviously be much lower than last time.
Being as i was in the real estate/ morgage bisiness I generally advised against it .
but it does depend on a lot of tangibles and personal situations .
(1) being it may be the only way you can ever qualify for a morgage .
(2) If you are sure things being equal that your combined income will increase substancially within the next 5 years and you can *refinance * it might not be such a bad risk .
(3) If the home you are purchasing is under market value or by investing a small amount you can sell with a few years and make a profit ..... go for it .
be very wary of them as the increase in morgage premiums in the next 5 years might result in you defaulting on your payments .
make sure there is no *penalty* for repaying the loan early especially in (2&3 ) situation
Consider all of your obtions carefully before making a final decision , in the case of a "MUST HAVE HOUSE" dont let your heart rule
In order for the Fed to stop the dollar getting any weaker it will have to raise rates I think.
I will lend you $10,000. Some months I'll let you repay me $100 + $100 interest and some months you'll have to pay me $100 + $500 interest.
If you like that idea, get an ARM ;)
(This is not financial advice or a promise to sell mortgages etc D )