Mortgage types question
Can someone explain me the pros and cons of fixed loans vs ARMs? ARMs in particular have higher APR but the interest rate is low, and I’m pretty confused with the whole situation. What are some protips when trying you find a lender as a first time homebuyer? Thanks in advance Blind community! Obligatory TC: ~ 380K
If you believe interest rate will stay low or youll refi several times in the next few yrs go for an ARM. If you believe they will go up or dont know what youre doing , fixed is better. I myself am trying to get an ARM but the rates right now dont justify the risk, last I checked it was 3.5 for 7/1 and 4.00 for 30 yr fixed
30 year fixed, don't gamble rates have been too low for too long.
ARM is a better choice if you don’t plan to stay in your house forever. I just got 2.79% 7 year ARM vs around 3.5% if 30-year fixed. 0.7% a year is a lot of money.
ARMs can’t have higher APR and lower rates. That doesn’t make sense. The R in APR stands for rate.
thats true but the assumption is that the cost to get both is the same. I would say in past 7-8 yrs you would have saved more money with arm and even if the rate were to skyrocket tmr to the cap u would still break even with fixed for a few more yrs
what if it's a single family home with basement. i'll rent out the whole house, then i'll be in the basement with separate entrance so i'm planning to stay there for long rent-free and save money until i get a second home. then i'll move out and rent that basement
If not as principal property i would go for 30 yr fixed, unless u plan to use it again as principal at some pt before arm expires and assume interest rate stay low
Depends on your scenario. Are you looking to live long term in that residence? Then fixed is better because you won’t be subject to potential interest rate ballooning at the end of the fixed portion of the ARM. If you’ll move out within five to seven years, then it doesn’t make sense to pay all that interest on the fixed loan (typically higher rate than ARM)