Posted on: 21st Sep, 2009 10:32 am
We bought our home in 2004 for 245,000. We took out a loan for 165,000. We now owe 141,500. We have a 30 year fixed loan at 5.25 % . We truly need a roof and since we are in need of loan we also want to remodel the kitchen and do some other home repairs. (the kitchen is 37 yrs. old & ugly). We are seriously considering a 5 yr. ARM witch on friday was 3.75 with I think? $6000 in points and closing cost. The new would be for $200,000.This allows our payments to be within $15.00 of our current payment ($911 to $926) We really can't afford to increase our payment more than $200 -$250. Both of our credit scores are close to 800. Should we take the risk????? We are very nervous. We would plan to make extra payments of at least that $200 per month. Lastly we have no real idea if we would move in the 5 yrs.
Thank -you
Thank -you
you'll need to be very clear on the precise type of adjustable rate loan you're getting. you want to know the index on which it's based, and the historical performance of that index. if it's at all volatile, you could be in for a rocky road down the road. i hope that "witch" was a typo and that you meant "which" because it might be scary otherwise.
with a 5-year deal, though, you're buying yourselves some protection right there. check the maximum change for that fifth year and also subsequent years' maximums. if, as you say, there's a possibility you may sell prior to that fifth anniversary, then you're even better off.
i'm not afraid of 5-year arm loans, and you ought not to be either. in this case, you're getting a nice, below-market rate to start with, and that ought to help you a great deal.
it's your decision to make, of course, but i don't think a 5-year arm puts you at terribly much risk.
with a 5-year deal, though, you're buying yourselves some protection right there. check the maximum change for that fifth year and also subsequent years' maximums. if, as you say, there's a possibility you may sell prior to that fifth anniversary, then you're even better off.
i'm not afraid of 5-year arm loans, and you ought not to be either. in this case, you're getting a nice, below-market rate to start with, and that ought to help you a great deal.
it's your decision to make, of course, but i don't think a 5-year arm puts you at terribly much risk.