> Sam wrote: > I'm thinking of doing the 5/1 ARM, not the interest only one. 4.8% and > after 5 years can only go up 2% with a lifetime cap of 5%. Hoping to > refinance in a year or two to get rid of the PMI. Worst can happen is > it goes up to 9.8% in 8 years. I figure it'll save me $500 a month > with the chance of going up $1000 in 8 years. > > Any thoughts?
A thought on ARMs (in general): ARM rates are fairly high now relative to fixed-rate loans. Even if fixed rates are at 6% today (and you can probably get a better deal than that), you'll be saving only 1.2% * (1 - your marginal tax rate) on the loan for the next 5 years, so maybe 0.72% (assuming 40% marginal rate) after-tax. A thought on your situation: Refinancing costs will wipe out the savings if you're talking about a short timeframe (you mentioned 2 years). How much can you put down? If 10%, you can do an 80/10/10 (AKA piggyback loan) - put down 10%, take out a fixed-rate conventional for 80%, and take out a 10% home equity loan (drawn against the 10% in equity from your down payment). There may be options for putting down even less than that and still doing the piggyback setup. The key point is: Do what you can to get out of PMI. Talk to lenders about loan options - there are so many innovative loan products now, there's likely to be one that fits your situation. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Find out how CFTicket can increase your company's customer support efficiency by 100% http://www.houseoffusion.com/banners/view.cfm?bannerid=49 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:143885 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
