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re: Talk me out of a 7 Year - Adjustable Rate Mortgage loan
Posted on 2/10/16 at 3:31 pm to yellowhammer2098
Posted on 2/10/16 at 3:31 pm to yellowhammer2098
quote:
What are the annual and life caps on changes in the interest rate? I
5% but i plan on selling the home before the 8th year hits and those go into play
This post was edited on 2/10/16 at 3:32 pm
3
Posted on 2/10/16 at 3:33 pm to CE Tiger
quote:Plans can change very unexpectedly. As Mike Tyson said, "Everyone has a plan until he gets punched in the mouth."
i plan on selling the home before the 8th year hits
This post was edited on 2/10/16 at 3:37 pm
Posted on 2/10/16 at 4:08 pm to CE Tiger
Don't be afraid of the ARM just because of its bad reputation.
We really benefited by using an ARM for our first house that we knew we were going to be out of in 5 years. We looked at what a 30 year fixed loan payment and amortization schedule would have been. Then we looked at ARMs but paying extra (ie keeping the same payment as the 30 year fixed would have been).
Due to the front loading of interest payments on a 30 year mortgage we wound up building way more equity in the house by taking out a 5 yr interest only ARM but making extra payments equal to fixed loan cost.
You have to commit to making up the difference in extra payments to really make it worth it.
We really benefited by using an ARM for our first house that we knew we were going to be out of in 5 years. We looked at what a 30 year fixed loan payment and amortization schedule would have been. Then we looked at ARMs but paying extra (ie keeping the same payment as the 30 year fixed would have been).
Due to the front loading of interest payments on a 30 year mortgage we wound up building way more equity in the house by taking out a 5 yr interest only ARM but making extra payments equal to fixed loan cost.
You have to commit to making up the difference in extra payments to really make it worth it.
Posted on 2/10/16 at 5:56 pm to CE Tiger
quote:
5% but i plan on selling the home before the 8th year hits and those go into play
not to say anything will happen in that time frame, but life changes happen and market changes happen as well.
If the market takes a dip in your area, and you cant sell the house for what you want you can be stuck in the house longer then anticipated.
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