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10/1 7/1 5/1 ARM Question Concerning Construction/Mortgage
Posted on 5/30/14 at 6:06 am
Posted on 5/30/14 at 6:06 am
So I call Whitney because I heard they have good products for building a new house. They offer me a choice of a 10/1 @ 4% ARM, 7/1 @ 3% ARM or 5/1 @ 3% ARM product for the construction/mortgage which is "modified" at the end of construction in to a permanent fixed rate product. They're all one time closing.
Why do the 10/7/5 years matter if it gets modified in to a permanent in less than a year? Shouldn't everyone choose the 5/1 since it has the lowest rate?
God damned financial people are like IT people. They speak too fast and in acronyms like you follow what the hell they're talking about.
Why do the 10/7/5 years matter if it gets modified in to a permanent in less than a year? Shouldn't everyone choose the 5/1 since it has the lowest rate?
God damned financial people are like IT people. They speak too fast and in acronyms like you follow what the hell they're talking about.
2
Posted on 5/30/14 at 8:45 am to BeerMoney
Do you want to sell in 5yrs or have to refi?
If not why would you choose the 5yr ARM to get maybe a .5% better on rate which is probably 50 more in payment
7yr arm is the better program of the 3
If not why would you choose the 5yr ARM to get maybe a .5% better on rate which is probably 50 more in payment
7yr arm is the better program of the 3
Posted on 5/30/14 at 9:00 am to BeerMoney
I'd take the 7/1, too, since it's the same rate as the 5/1. Find out what the max adjustment rates are- you might take your chances with the adjustment, if yours is like mine and the max adjustment per year is 2% and the cap is 5%, then it may work out better for you. I locked in at 2.875% 18 months ago for 7 years- In year 8, it can adjust 2% max, so even then I'm still under 5% and if rates are still down, then I can just refi.
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