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re: Talk me out of a 7 Year - Adjustable Rate Mortgage loan
Posted on 2/10/16 at 4:08 pm to CE Tiger
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.
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