- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Shopping for mortgage: ARM vs fixed?
Posted on 6/8/23 at 9:47 am
Posted on 6/8/23 at 9:47 am
We plan on living on this home for at LEAST 5 years and after that maybe transition to a bigger home or make a rental.
I understand the general risks of ARM vs fixed but given our situation, would you go ARM? If so 5/1 is what I am looking at but with rates looking to go down, should i look for 5/6?
I understand the general risks of ARM vs fixed but given our situation, would you go ARM? If so 5/1 is what I am looking at but with rates looking to go down, should i look for 5/6?
5
Posted on 6/8/23 at 10:27 am to fareplay
This might be a dumb question as I’m on the commercial side - but wouldn’t a 5/1 ARM be priced higher or the same as a 30 year mortgage right now with the inverted yield curve?
Posted on 6/8/23 at 10:39 am to fareplay
5/1 and 5/6 pretty much serve the same purpose.
60 months fixed rate.
The difference being the adjustments thereafter (annual adjustment or 6 month adjustment).
If you feel a high chance that rates go down, you will benefit one of 3 ways.
1) lower 60 month rate than traditional 30/15 year fixed. You immediately win.
2) rates drop and you refinance into a better rate (i.e. you are using the first mortgage for under 30 years and take advantage of a lower cost to borrow prior to the refinance)
Why pay more for 30 year security when no one ever keeps a mortgage for 30 years maturity? The average duration of a mortgage is just over 4 years.
3) rates drop and after 60 months, you let the arm drop your rate even lower than it started without having to refinance.
Personally, I look to lock in my "equity gains".
If I take an arm, I still make the monthly payment on the 15 year or 30 year fixed. Even if rates go up after 60 months, I am ahead of the game with a lower principle balance and the odds are that the rates will eventually come down.
I hope that plots out some options for you. Good luck.
60 months fixed rate.
The difference being the adjustments thereafter (annual adjustment or 6 month adjustment).
If you feel a high chance that rates go down, you will benefit one of 3 ways.
1) lower 60 month rate than traditional 30/15 year fixed. You immediately win.
2) rates drop and you refinance into a better rate (i.e. you are using the first mortgage for under 30 years and take advantage of a lower cost to borrow prior to the refinance)
Why pay more for 30 year security when no one ever keeps a mortgage for 30 years maturity? The average duration of a mortgage is just over 4 years.
3) rates drop and after 60 months, you let the arm drop your rate even lower than it started without having to refinance.
Personally, I look to lock in my "equity gains".
If I take an arm, I still make the monthly payment on the 15 year or 30 year fixed. Even if rates go up after 60 months, I am ahead of the game with a lower principle balance and the odds are that the rates will eventually come down.
I hope that plots out some options for you. Good luck.
This post was edited on 6/8/23 at 10:43 am
Posted on 6/8/23 at 11:05 am to fareplay
I don't think I'd consider a 5 year ARM if I were planning to live there longer than 5 years.
This post was edited on 6/8/23 at 11:40 am
Posted on 6/8/23 at 11:57 am to fareplay
If you want to talk to someone who can answer those questions, my son is a loan officer for GMFS and I can send you his number.
Posted on 6/8/23 at 1:00 pm to fareplay
ARM for short term home purchase or you want to pay the home off fast
Posted on 6/9/23 at 4:33 am to LSUAngelHere1
Sure that would be great but I live in MA not sure if he supports the area
Posted on 6/9/23 at 11:20 am to Im4datigers
quote:
wouldn’t a 5/1 ARM be priced higher or the same as a 30 year mortgage right now with the inverted yield curve?
Posted on 6/9/23 at 5:42 pm to Big Scrub TX
I just pulled up a wholesaler website and confirmed the 30 yr rate right now is 6.25% and their 5 year arm is 7.5% (no points).
Fremont Bank
Fremont Bank
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News