ARM?

Does anyone have this type of mortgage?

I'm kinda confused, how do ARM payments differ from 30-yr fixed mortgage payments. If you get a 5/1 ARM, the first 5 years are fixed... but is it at a lower rate than a 30-year fixed would be?

What about an Interest Only ARM? I know you are only paying interest and nothing towards principal, but can you still pay towards principal if/when you wanted to? Say you get $20k 6 months down the road and you want to apply it to your principal, but you have an interest only ARM... can you do that?

I've done a ton of searches, but want to hear from someone who has actually done this. Thanks!

Re: ARM?

as for the ARM mortgage - the interest is fixed for the first 5 years just like a 30 year mortgage - then every year after the 5th year the mortgage can go up or down ususally a certain number of points - mortgage rates fight now are still very low compared to historically

the 5 year ARM is good if you plan on being in a house for 3-4 years - if your are thinking 4-6 - then go with a 7 year arm - you don't want to be forced to sell becasue a higher interest rate is coming - mortgages are public documents so a buyer can look it up and use it for negotiating if they know your rate can change soon - there is also 10 year ARMs - wells fargo i know has the 7 and 10

just make sure there is no minimum time the loan must be ot before it can be refinanced or closed again also avoid penality clauses for early prepayment of the loan

as for an interest only arm - yes your payment is for interest only - you can pay the principal as you want- this is a god option for sales people because there commision checks allow them to pay the prinicpal -

the interest only need to be careful in this market because there is no gurantee the house is going to be worth more in 3 years and you could run into financial trouble and you cannot sell the house for what the mortgage is worth

hope this helps there are other girls on here who know lots more

Re: ARM?

I think snowprincess summed it up great. Just wanted to add: If you get an ARM makesure there are annual and total caps. like it can only go up 2% a year and 5% over the total life of the loan. it gives you some protection if you don't sell or refinance in the time.

Also ARMs are always lower - so you do save interest in that regard.

I would be careful with IO, unless you are putting a good amount down or if like you said you are having money coming in at a later date.

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Thanks girls, this is great info!

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Posted by ODonnell

Posted by lululu

Posted by snowprincess

mortgages are public documents so a buyer can look it up

Mortgages are public information? where would you go about looking up someone's mortgage? I had no idea!!!!

As far as I am aware, you can only search for mortgage documents within the 5 boroughs of NYC.

Re: ARM?