ARM Question

So, we are doing our pre-approval hunting and had a question. For one of the companies that a lot of residents use they have a 3, 5 or 7 ARM. So for us, we will be there 4 years, and we would be approved for the 5 year at 5%. But that could go up after the 5 years, which i doubt we would be in that house then. They said that most people move or upgrade their home...

Everything else about this is great and our realtor who is a resident wife, recommended this place and said that they usually have the best rates.

I'd love some advice!

[SuzySunshine]

Re: ARM Question

We have an ARM, a 7 year ARM which is how long our residency is. Choosing one a year longer would have been great if we had that option b/c if we don't sale we'll be SOL. But I think ARMs are great in a resident situation b/c 99% of the time you're going to move up or out when you're done. One thing to keep in mind though is a fellowship, will your DH be doing one? If so, how long are they?

[locumtenenswife]

Re: ARM Question

I got a 5 year arm on my mortgage, and am regretting it now that the market is falling and interest rates are going up. DH and I need to sell our house to relocate for a permanent position, and its looking like we're going to have a tough time selling the home for what we paid for it. Worst yet, interest rates have gone up so much that our monthly payment will be going up substantially once the rate changes. Consider how much interest rates will change in 7 years before you commit to a adjustable rate mortgage. Interest rates were at an all time low when we purchased the home, and now I'm regretting that we didn't just get a fixed rate when we initially bought.

[SuzySunshine]

Re: ARM Question

The market you're moving into is different then most. If you buy a house that is affordable for the next resident you'll sell it when you plan to. The house turn over from resident to resident here is insane. DH and I have no qualms about our ARM.

[DCJenn]

Re: ARM Question

We also have an ARM on the DC house, because despite the crappy market at the moment, things do sell and with the every 2 year turnover, DC stuff always sells.

Our ARM adjusts in '09 so I'm planning on having the place unloaded by then.

If you live in a place that does have a high turnover, then you should be fine. I wouldn't do it in a place like Ohio, So.Cal. or any of the other really hard hit communities. There is just too much sitting on the market in those areas.

Jenn