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/u/jbnotagain
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Just looking for some confirmation to make sure I'm not missing something. We are buying our first home and are typically pretty conservative financially. I am looking at two potential routes:
1) A pretty standard, 6.875% 30 year fixed rate loan OR 2) A 6.125% 5/5 ARM. The ARM has 60 months until the initial adjustment and then 60 months between adjustments. It caps at +/- 1% every adjustment (i.e. every 5 years) with a max rate of 11.125% (year 26)
I have run the numbers and we can comfortably afford either. My thought is to take the ARM and use the ~$210/month savings and put that into the principal so that we lower our monthly payment further on first recast. We can always refinance along the way and I have considered that in my analysis. We would stand to save about $18k over the first 5 years in interest, closer to $11k when netting for lender credits on the fixed and the refi cost. Breakeven ranges from 14 years to 17 years depending on different scenarios.
Do we just take the ARM and run?
submitted by /u/jbnotagain
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Confirm my thoughts ARM v fixed
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1) A pretty standard, 6.875% 30 year fixed rate loan OR 2) A 6.125% 5/5 ARM. The ARM has 60 months until the initial adjustment and then 60 months between adjustments. It caps at +/- 1% every adjustment (i.e. every 5 years) with a max rate of 11.125% (year 26)
I have run the numbers and we can comfortably afford either. My thought is to take the ARM and use the ~$210/month savings and put that into the principal so that we lower our monthly payment further on first recast. We can always refinance along the way and I have considered that in my analysis. We would stand to save about $18k over the first 5 years in interest, closer to $11k when netting for lender credits on the fixed and the refi cost. Breakeven ranges from 14 years to 17 years depending on different scenarios.
Do we just take the ARM and run?
submitted by /u/jbnotagain
[link] [comments]
Confirm my thoughts ARM v fixed
Continue reading...