Quote:
Originally Posted by Halon
Interest rates are at record lows. They have come up a little in the past few months but still are ridiculously low in the grand scheme of things. I'm not financial genius, but I don't know why anyone would get an ARM right now? We locked in at 3.625% for a 30yr on our house.
From the sounds of the one you are talking about, you'd be locked in at 3% for 5 years. Then after 5 years, the way I believe that cap % number is that is the max it's allowed to change every year. So worst case scenario you could end up at 5% at year 6, 7% at year 7, 9% at year 8 (you've tripled your interest rate at this point), etc. Will it change that max cap amount every year, probably not. But that's the thing with an ARM, you really have no idea and no control over what happens after the fixed period is over.
If you're OK with that, then sure I guess go for it. I know I personally won't go anywhere near an ARM.
Do you know what the highest rate the mortgage can ever reach over the life of the loan? Also, do you know what the margin percentage is?
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not sure, just spoke with my mortgage adviser this afternoon and haven't gotten into the details.
he is still running initial number calculations right now and hasn't gotten to the fine details.
My big problem is I have a second mortgage, well my name is tied to one, with my dad that is on a 300k condo so my debt/income always sucks so this was one way that my guy said we might be able to pull of the refinance was to get the rate that much lower.
The condo I just co-signed and we have renters that my dad takes care of and its up for sale now so hopefully i come off that soon and I don't have to worry about it but for now I am trying to refinance before the rates go up anymore. I am at like 5.5 or 5.75 right now so anything will be better than that. And in the next year I need to refinance anyway as my current loan is a 5 year balloon mortgage (30 year amortization).