Fixed vs Variable
- Thread starter Haulin_05
- Start date
Stick with your fixed, unless you plan on selling in the next 5 years or IF you can sell in the next 5 years. If you don't, you'll have to refinance again and who knows what rate you'll get then. Better safe than sorry!
I would stay with a fixed rate, too. The market is way too crazy right now to know where the rates will go.
Why would you drop a fixed rate?
ARM are what got a lot of people in trouble. just because it's 4.25% today doesn't mean it will be tomorrow. it could be 11% then... your fixed rate WILL save you money in the long run.
ARM are what got a lot of people in trouble. just because it's 4.25% today doesn't mean it will be tomorrow. it could be 11% then... your fixed rate WILL save you money in the long run.
yeah I PLAN on selling in the next 18 months, but in all likelyhood I wont be able to. I am pretty upside down right now. Most likely I will either be living in it a little longer or move anyway and rent it out. If I do the refi I will get 2 months of no payments and my escrow account refunded to me and my monthly payment will be 250 less than it is now. After 5 yrs it can only adjust 1% a year, up or down, with a cap of 5%. So the highest it would be is 9.25 in 10 years and the chances of me still owning it then is slim. the lower payment makes it easier to rent if I do that and in 18 months my prinicple will be the same whether I refi or not. I am in the military and getting out in 18 months trying to move back to texas.
I have a 5yr arm on our home on Cape Cod, it resets in July of this year, right now it is at 5.25%. When it resets the new rate will be the the one year libor rate plus 2.25%, as of today the libor rate is 2.12, so our new rate would be 2.12 + 2.25 = 4.37% and that rate would stay at that til July of 2010 where it would reset again based on the 1 year libor rate at that time, plus its capped at a 2% increase, meaning it can never jump 2% higher than the previous year.
I was going to refinance myself, but I'm going to try my luck and hope the libor trends down for at least this year. I don't feel like paying points and refinance charges when I may have a lower rate than most for the next few years. just my .02
I was going to refinance myself, but I'm going to try my luck and hope the libor trends down for at least this year. I don't feel like paying points and refinance charges when I may have a lower rate than most for the next few years. just my .02
In the current state there is no reason to get an ARM because the ARM rates are now higher then the 30 year fixed rates...
not in all cases, the ARM is lower for me by more than 1%
the math has been done. i would be sitting even. im not sitting pretty in my current situation so i am being very careful and triple checking everything.
So you would save enough to cover the closing cost fees?
What is the point of even doing this? Just to lower payments?
Also although your escrow will be refunded you do not get to keep that money. That is for insurance and taxes and must go back in the new escrow. Otherwise you will come up short on escrow and they will adjust it UP big time.
Additionally you talk about renting it out. You cannot do that if you are FHA because mortgages are for primary residences only. Rental properties are for ballers than can afford to not go FHA...
It sounds like you have given this a lot of thought but at the end of the day my assessment is that it is a bad idea.
What about taking in a renting roommate to defray costs?
What is the point of even doing this? Just to lower payments?
Also although your escrow will be refunded you do not get to keep that money. That is for insurance and taxes and must go back in the new escrow. Otherwise you will come up short on escrow and they will adjust it UP big time.
Additionally you talk about renting it out. You cannot do that if you are FHA because mortgages are for primary residences only. Rental properties are for ballers than can afford to not go FHA...
It sounds like you have given this a lot of thought but at the end of the day my assessment is that it is a bad idea.
What about taking in a renting roommate to defray costs?
you would probably need to pay points to get the low rates everyone is talking about, on my primary home I got a rate of 5.375% with a refinance last year no points, I'm good with that rate, on our second home the one we have the arm with, I'm gonna gamble with the arm for the next year or so. If the home you are talking about is your primary and you are upside down, I would wait to see what Obama does, they are working on a plan to help home owners in your situation.
most likely i wont be selling in 18 months. I dont think the economy will recover enough for me to sell it. but if it does i would be even with what i have now. i would be saving 250 a month which is attractive and makes the payment easier to afford if i have to rent it for lower than my mortgage. i am still exploring VA vs conventional loans and what my options are with that. i would get the escrow money because a new one is going to be opened if i go with it. I have a wife and a kid and think a roomate is bad news. also the spare bedroom is my office.
So I would:
lower my payment by 250 a month
Get 2 months no payments
escrow refunded.
but it is variable after 5 years. i dont know still researching and thats why i asked for input. trying to see if there are other things i havent considered.
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Imagine if this thread was a few years old....haha. I wouldnt even tempt it if you're only going to save a couple hundred a month. Get the Fixed and love the house while you are comfortable with your rate
Secure job? Several months already saved up for a rainy day?
Secure job? Several months already saved up for a rainy day?
stick with fixed rate. ARM is a gamble that likely wont pay off, the cons far outweigh the pros.
have you learned nothing from the last few months, ARM is one of the reasons so many got in such deep trouble...they gambled and lost big
people bought things they couldnt afford in the first place. i can afford mine now, and i could afford it if it ever hit the max interest rate of 9.25. i have learned a lot from what other people have done but my situation isnt the same either.
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