956,052
For me it would be the time value of money benefit, did something comparable, I borrowed against a HELOC to make another property purchase. I had other cash, but it was best to use the other cash for business purposes.
There are other good reasons to consider an adjustable loan over fixed... relatively short ownership period, expected windfall in the near future to cover the debt, etc.
-
John Pusa
Glendale, CA
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Candice A. Donofrio
Fort Mohave, AZ
-
Kathleen Daniels, Prob...
San Jose, CA
-
Ron and Alexandra Seigel
Carpinteria, CA
-
Carol Williams
Wenatchee, WA
-
Diana Dahlberg
Pleasant Prairie, WI
-
Michael Jacobs
Pasadena, CA
4,581,818
A good dialogue between a buyer and his/her/their loan agent.
-
John Pusa
Glendale, CA
-
Tony and Suzanne Marri...
Scottsdale, AZ
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Kathleen Daniels, Prob...
San Jose, CA
-
Ron and Alexandra Seigel
Carpinteria, CA
-
Carol Williams
Wenatchee, WA
-
Diana Dahlberg
Pleasant Prairie, WI
-
Pete Xavier
Pacific Palisades, CA
2,684,569
When prices are on the rise, and interest rates are climbing, and you only expect to live in the property for a couple of years.
-
Erik Lilyquist
Scottsdale, AZ
-
John Pusa
Glendale, CA
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Eve Alexander
Tampa, FL
-
Kathleen Daniels, Prob...
San Jose, CA
-
Pete Xavier
Pacific Palisades, CA
249,599
It can be. I bought my house in 2003 and got a 5/1 Arm at 5.625%, about 1% lower than a fixed. The first adjustment it stay close to the 5.625% and after that I haven't paid more than 4.25% and spent a lot of time in the 3's. Never had to pay to refi.
-
Erik Lilyquist
Scottsdale, AZ
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Fred Griffin Florida R...
Tallahassee, FL
-
Kathleen Daniels, Prob...
San Jose, CA
-
Pete Xavier
Pacific Palisades, CA
679,404
I would speak with a trusted Lender ... but most often an adjustable rate mortgage is used when you are not planning to stay with this property very long ... And you can usually get a lower rate ... but remember, it's "adjustable" -- that means it can go UP or DOWN.
-
Erik Lilyquist
Scottsdale, AZ
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Kathleen Daniels, Prob...
San Jose, CA
-
Pete Xavier
Pacific Palisades, CA
2,221,377
Great questions for a loan officer.
-
Pete Xavier
Pacific Palisades, CA
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Anthony Acosta - ALLAT...
Atlanta, GA
2,187,462
There are several circumstances where an adjustable rate would be advantageous because the starting rate is lower than a fixed rate.
I've used that strategy effectively to save money when I knew I would be selling before the adjustment period.
This is a good question to ask a loan officer to discuss based on your individual financial circumstances.
-
Debe Maxwell, CRS
Charlotte, NC
-
Kathleen Daniels, Prob...
San Jose, CA
-
Pete Xavier
Pacific Palisades, CA
-
Diana Dahlberg
Pleasant Prairie, WI
-
Michael Jacobs
Pasadena, CA
5,583,328
of course, you would discuss this topic with your lender, but in my opinion, it would be best if you definitely knew you would be staying at the property for a very short period of time....I'd get the lowest rate possible....
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Debe Maxwell, CRS
Charlotte, NC
-
Kathleen Daniels, Prob...
San Jose, CA
-
Diana Dahlberg
Pleasant Prairie, WI
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
5,111,821
When it makes financial sense.
-
Peter Testa
Danbury, CT
-
Kathleen Daniels, Prob...
San Jose, CA
-
Ron and Alexandra Seigel
Carpinteria, CA
-
Pete Xavier
Pacific Palisades, CA
-
Michael Jacobs
Pasadena, CA
3,349,229
What Pete Xavier with AffordablePlan.org said.
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
7,862,315
When it best needs the needs of the borrowers.
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
1,552,877
-
John Pusa
Glendale, CA
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
4,434,177
Nina has answered.
-
Kathleen Daniels, Prob...
San Jose, CA
-
Diana Dahlberg
Pleasant Prairie, WI
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
759,335
When you don't plan to live there longer than the fixed rate term of the ARM
-
Erik Lilyquist
Scottsdale, AZ
-
John Pusa
Glendale, CA
-
Pete Xavier
Pacific Palisades, CA
5,253,385
When you plan to reside or owe on the property for less than the number of years on the ARM.
We have interns who are buying and know they will only reside in Charlotte for a 2-4 year timeframe, will get a 5-year ARM to save significantly on the fixed interest rate.
-
John Pusa
Glendale, CA
-
Pete Xavier
Pacific Palisades, CA
-
Peter Testa
Danbury, CT
519,324
When the borrower doesn't expect to be in the home much if any longer than the rate is set before the adjustments begin and the difference in rate is enough for the borrower to take the risk something will change.
For example a 5/1, 7/1 or 10/1 ARM makes sense for someone living in the home for 5, 7 or 10 years or just slightly longer provided the rate difference compared to a 30 year fixed, is enough.
Frankly, only a lender with complete file and rate sheet should advise the buyer. As Agents, we can listen, learn and support their choice or refer them to someone else if the information they are receiving is suspect.
-
Pete Xavier
Pacific Palisades, CA
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
1,712,776
Wisdom not required.
-
Erik Lilyquist
Scottsdale, AZ
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
4,174,944
Many great responses.
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Pete Xavier
Pacific Palisades, CA
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
6,416,169
When you are likely to move in the first few years.
-
Peter Testa
Danbury, CT
-
Debe Maxwell, CRS
Charlotte, NC
3,988,013
When rates are high and you expect the market to come back down and don't want to be stuck in a higher rate.
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
5,060,117
It's definitely a discussion to have with your lender, but if you know you are going to be selling the home before the adjustment time frame, it could be a benefit. But stuff happens.
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
1,505,863
For long term hold, never.
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
1,525,616
It is not for everybody, a loan officer would be the best to adivse about this.
-
Debe Maxwell, CRS
Charlotte, NC
-
Michael Jacobs
Pasadena, CA
5,772,575
Ask a lender for the pros and cons of this. A
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Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
2,784,416
When income is tight
-
Michael Jacobs
Pasadena, CA
-
Pete Xavier
Pacific Palisades, CA
15,342
As a lender, I have heard both sides of this discussion. Some will "never" do an ARM, and only a fixed rate, others love ARM's (typically the borrower who doesn't stay in one place for very long).
I have my opinion, but that is just me, I would say that its definitely a personal choice. I know I will not be in my house for the duration, so I chose an ARM, because the rate (which in turn led to a lower payment) was just too good to pass up. Now heres to hoping, with rates going up, that I don't have a change of heart...
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Pete Xavier
Pacific Palisades, CA
712,423
544,014
5,877,179
I do not advice about loan programs, that is between the buyer and their lender.
108,016
Two times:
- When interest rates are crazy high by historical standards (like the 30 is in the 7's or 8's).
- When someone plans to hold the property for only a few years. They're pretty popular with investors that take their time to renovate (I've seen some that purchase the property, move in, fix 'er up and then sell after a two years).
87,920
Many reasons, one of them: if you are going to live at the property for many years and want your monthly payment to be the same.
3,416,038
It is only better if you plan on being there less than 5 years. if not, get a fixed rate.
4,800,132
3,071,489
4,900,085
Yes if you are absolutely, positively, 100% sure, without a shadow of a doubt that you are going to move in 3-5 years .
5,237,947
Your length of ownership will be limited and you can take advantage of a lower rate.
902,038
When the rates are much lower and you plan to sell VERY soon. Otherwise, over a longer period you would be exposed to unpredictable, potentially much higher interest costs as the rate adjusts up.
4,319,773
It is a personal choice for the buyers.
For a condo/townhouse buyers, if they plan to live in the property for less than the term of the ARM, they should opt for ARM - my two cents.