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Rainmaker
3,924,073
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

It's best to discuss and decide between buyer and their lender.

Sep 29, 2019 06:40 PM
Rainmaker
962,353
Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

That depends on the needs of the buyer

Sep 30, 2019 02:37 AM
Ambassador
4,054,736
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

They're typically good for a short-term stint in one place/property.

I would strongly advise seeking the advice of a financial planner and a lender so you can make an informed decision.

Sep 29, 2019 09:12 PM
Rainmaker
1,825,916
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

I've never been a fan of adjustable rate mortgages but they can work great if you don't plan on staying in the home long.

Sep 29, 2019 06:14 PM
Rainmaker
662,404
Peter Testa
Nationwide Homes - Danbury, CT
PETER TESTA

When you plan to stay in the property short term.

Sep 29, 2019 05:43 PM
Ambassador
5,171,775
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

When planning to leave in a few years.

Sep 29, 2019 08:15 PM
Rainmaker
873,328
Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

I used an adjustable-rate mortgage when I knew I would be moving in 5 years or less. Went with a 7-year ARm and reduced my interest meaningfully.

Sep 29, 2019 07:00 PM
Rainmaker
3,864,737
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Many different factors to consider. I suggest you have an indepth discussion with a lender. As a Realtor I don't provide advice on financing except in very broad terms.

Sep 29, 2019 10:22 PM
Ambassador
1,799,383
Alan May
Jameson Sotheby's International Realty - Evanston, IL
A moving experience!

An excellent question to discuss with your lender.

Sep 29, 2019 07:24 PM
Rainmaker
1,231,318
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Talk with your lender.

Sep 30, 2019 05:39 AM
Ambassador
4,468,241
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

If the time frame in the home is only a few years.

Sep 29, 2019 09:54 PM
Rainer
222,865
Bob Betel
Allstar Home Mortgage, Inc. - Sweetwater, TN
President, Allstar Home Mortgage, Inc

The idea here is that the rates are lower the shorter term you take out. Adjustable rates are used for “short terms” thereby saving you money. Most thinking is that you should use an Adjustable rate ONLY if you are 100% positive you plan on selling your home before the rates adjust. However, it depends on the economic cycle that we are in. If interest rates are going up, you need to be prepared for your adjustment to go up. If interest rates are going down, like the last 12 years, your adjustments will also be lower than before. I had a 7 year ARM and kept it for 12 years and my rate adjustments kept going down. In years past, these ARMS were taken because the future insterest rates were headed lower. Now that we are in a low rate environment, it is better to go with a fixed rate loan for the long run.

 

Sep 30, 2019 06:17 AM
Rainmaker
3,302,215
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Many great responses.

Sep 29, 2019 08:54 PM
Rainmaker
543,564
Jason E. Gordon
AmeriFirst Financial Inc, San Diego, CA - San Diego, CA
Sr Loan Officer, CMA, CMPS, CDLP, CDRE, RCSD, CDPE

Generally speaking, the longer you "fix" in the interest rate on your mortgage, the higher the interest rate (thus the higher your payment and amount of ongoing finance charges).

Of course the opposite is true for short term fixed rates (as they are typically lower).

With this simple concept in mind, if you are pursuing a short term mortgage solution (1-3 years for example), you might consider a short term fixed mortgage (i.e. ARM, 3/1, 5/1). By having a short term desire for the money, you can typically enjoy lower rates from the inception of your loan, then "ride out the storm" with fluctuating rates with a lower probability of risk.

It bears noting that certain economic markets move in different directions (Google "inverted yield curve" for details). In the end, it is always a good idea for the Borrower to speak with a fiscally literate Mortgage Loan Officer to discuss options, goals & timelines specific for that Borrower. 

Thanks for the shout Thomas J. Nelson, Realtor, ePRO, CRS, RCS-D 

 

Sep 30, 2019 07:47 AM
Rainmaker
1,163,778
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

The answer varies with each person considering it; you simply can't give a generic answer to this since each borrower is different, outside of it often being a lower monthly payment opportunity. I'd ask Jason E. Gordon 

Sep 30, 2019 07:24 AM
Rainmaker
3,293,205
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

ONLY if you are staying in a home less than 5 years. and that the rate wont adjust for said 5 years. Otherwise, with rate sthis low, lock them in for 30 years

Sep 30, 2019 05:37 AM
Rainmaker
820,736
Peter Mohylsky. Broker Associate
Miramar Beach - Santa Rosa Beach, FL
THE BEACH IS OPEN AND WAITING FOR YOU

Run the numbers compare the long term costs and make a decision based upon facts not emotions.

Sep 30, 2019 04:58 AM
Rainmaker
3,837,396
Richard Weeks
Dallas, TX
REALTOR®, Broker

When one knows absolutely, positively, 100% sure you are only going to live in a house for a short period of time then an ARM may be the way to go.

Sep 30, 2019 04:32 AM
Rainmaker
3,795,082
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Not now with low interest rates.


Sep 30, 2019 08:17 AM
Ambassador
2,992,306
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

I wish you all the best with your real estate studies. 

Sep 30, 2019 07:40 AM
Ambassador
2,510,433
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

When it best suits the circumstance. A lender can help with that!

Sep 30, 2019 07:01 AM
Rainmaker
1,132,470
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Not licensed in loan. Not allow to ans that question.

Sep 29, 2019 08:11 PM
Rainmaker
6,318,579
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

When an ARM best meets the needs of the borrower. 

Those who plan to move in a couple of years may be good prospects.

Sep 30, 2019 02:18 PM
Rainmaker
468,109
Dan Pittsenbarger
Keller Williams Western Realty - Bellingham, WA
Improving Conditions

Most commonly when you know that you're only going to be in the place 2 or 3 years.

Sep 30, 2019 09:00 AM
Rainmaker
5,320,694
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

I agree once again with Michael Jacobs 

Sep 30, 2019 08:34 AM
Rainmaker
1,356,933
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

first you have to ask with a name.  Then ask a lender.  Reported.

Sep 30, 2019 07:35 AM
Rainmaker
637,297
Abby Stiller
REMAX Realty Group - Cape Coral, FL
Professional Bilingual Realtor (239) 284-8637

You already got great answers from lenders 

Sep 30, 2019 05:25 PM
Rainmaker
1,653,738
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

 Like Mel Ahrens, MBA, Kelly Right Real Estate , I took advantage of an adjustable rate mortgage for a short term refi.  Saved us a lot of money on interest expense.

Sep 30, 2019 04:08 PM
Rainmaker
861,659
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Adjustable rate mortgages were very good deals when rates were plummeting. In a rising rate market the opposite would be true.

Someone who is only planning to own the property for a short time may think an adjustable rate mortgage is a good option. Of course, selling within a short time, with the attached costs, may not be in an owner's best interest.

Sep 30, 2019 03:21 PM
Rainer
179,715
Harjeet Bhatti
FITH THIRD BANK - Chicago, IL
Home Mortgage Consultant 25 States

Fix rate is not always good option for all the clients. Paying higher rate and staying in property for shorter period of time will effect on equity position.

Sep 30, 2019 02:45 PM
Ambassador
949,224
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

In the current marketplace, rarely.  In a market where the rate spread between fixed and adjustable rates is greater, then shorter term loans can offer borrowers a substantial savings.  

 

Also in cases where the borrower knows they'll have a windfall and will be able to pay their loan down or off in a short period of time.

 

And sometimes when someone makes enough income to have an ARM come with close to 0 risk.  They can afford the payments, saving interest during the intial fixed period, and if rates end up going up and they can't/don't refinance, rate increases won't negatively impact them.

 

In the current market though, fixed rates are better options for 90%+ of borrowers

Sep 30, 2019 10:51 AM
Rainmaker
5,570,474
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

a good discussion to have with the lender....

usually, when rates are high and you're not staying long term...

Sep 30, 2019 09:42 AM
Rainer
300,871
Caroline Gerardo
Sun West Mortgage Corporation - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Most often never; but, if buyer is positive for certain they only need half the time of the fixed time period, maybe. 

Sep 30, 2019 05:27 PM
Rainmaker
4,694,804
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Not for me to make an opinion, not a lender.

Oct 10, 2019 10:02 AM
Rainmaker
525,582
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

They are best for buyers who don't plan on staying very long

Oct 01, 2019 03:43 AM
Rainmaker
2,061,599
Evelina Tsigelnitskaya
SIB Realty - Sunny Isles Beach, FL
www.SIBRealty.org 305-931-6931

Depends of the buyers needs

Sep 30, 2019 09:44 PM
Rainmaker
1,596,146
Valeria Mola
SIB Realty - Miami, Sunny Isles Beach - Sunny Isles Beach, FL
305-607-0709 SIB Realty Condos for Sale and Rent

Depends how long you want to have that property.

Sep 30, 2019 08:10 PM