ARM vs fixed
New to these. Some basic questions before i call lenders. - would both options allow refinance ? - how much typically refinance cost? - can we refinance within same bank? - can we refinance another ARM plan with different lender? - do you focus on APR rate alone? Or interest rate? Any other cost do we need to check. I am just focusing on APR % or per month dollar mentioned bank for comparisons. - if we can refinance, then wouldn’t it be better to take ARM since it gives 1% less for next 7 years. If interest rate drops then i will refinance. If rate stays same or goes higher then i will keep ARM for next 7 years. Most likely i will resell house within years or end up full payoff. Only bad case is if i dont resell or dont payoff all loan and rate increase more after 7 years then i end up paying more interest due to existing ARM plan as well as i dont have good reference options. Tc 530k
What the f*** are you talking about? All I can think about is x86 vs ARM. ARM sell houses now?
The chip design business wasn’t profitable enough. They’re pivoting to real estate.
This would be so much easier if you just talked to a lender.
That was my thinking. I got a 10 year ARM because it was more than a percent less than a 30 year fixed. I pay that extra 1% that would have gone to interest on reducing principle instead. I may sell the house before I ever get to the 10 year point. If I don’t, it is pretty likely that interest rates will drop below what I am paying now at some point in there, in which case I will refinance. The key thing is don’t use it to make an unaffordable house affordable. Use it to make an affordable house better for you. Then if things go unexpectedly bad for some reason you will be much less likely to lose the house.
ARM requires financial discipline that most people lack. If you plan on selling or paying off the loan by the fixed interest time, ARM is the best option. I’d never assume that the floating interest is going to be better than what I have or I can refinance at a whim when the time comes. 30 yr fixed is for folks who just want stability for the years to come.
Ask your lenders. I took ARM 7/1 because I have a reasonable prediction that I can just pay off the house 7 years from now. If I can’t then I will refinance later.
Probably pay mostly cash now, maybe take out ARM for the tax deductible portion.
ARM is a major cause of the 08 recession. Effectively people were given teaser rates that expired and then they couldn't afford the actual payments. My advice, get the 30 year fixed, there is a reason it's the classic option as it provides a "fixed" rate.
I understand. Thanks. In my case mostly i am planning to resell house before 7 years. What do you recommend?
Best case for fixed is if rate goes beyond 7%. Best case for ARM, rate goes below 7% anytime before 7 years, then we just refinance. Am i right or missing something more?