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Do you suggest an arm loan if i'm only looking to keep a new house for 10 years?

I may consider selling before 10 years.. my wife and I love to travel and hope to relocate every 10 or so years in our life. Is there a specific arm program that would best or are we better off with fixed 10 year by joejoe_vargas808850 from Houston, Texas. Nov 25th 2013 Reply


Larry Gray (lgray_312_247)
#594 ranked lender in California - 1,139 contributions

I recommend looking at a comparision of a 10/1 and perhaps a 7/1 ARM withthe 30 yr. fixed. Look at the savings over a period of years compared to the payment on the 30 yr. fixed. You have to decide your comfort level. If you are certain about selling within 10 years and the savings on a 10/1 ARM looks good, it likely will make sense. You also need to be clear on what the maximum payment is that your payment would adjust to the first time, each year, and the maximum totalincrease possible. In Europe, people are used to having adjustable loans!

Nov 25th 2013
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Mary Papageorge (MaryPapageorge)
#94 ranked lender in Texas - 48 contributions

Fixed rates are so low, that it would protect you in case something happens and you end up changing your mind. However, there is a 10 year ARM (adjustable rate mortgage), that would be fixed for 10 years and would adjust after that. A 10 Year ARM is amortized over 30 years, but a 10 year rate is amortized over 120 months (10 years), so it would pay off the house when the term ends for the fixed rate. Looking forward to assisting you. Mary Papageorge 713-569-0025

Nov 25th 2013
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Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

A 10/1 or 7/1 ARM may be your best choice.

Nov 25th 2013
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Bryan Horn (bryanhorn)
#878 ranked lender in California - 19 contributions

I will be the contrarian point of view on this question. I say take a 30 yr fixed loan and in 10 yrs when you want to move, you should rent out the house and have someone pay your mortgage. First off - you will save 6% in equity as you will have to give that 6% of the sale price to the realtors to sell your house.20 yrs later you will own a house free and clear. have a great retirement and a happy life :-)Bryan.horn@fremontbank.com

Nov 25th 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

It is worth considering, but 10 years is a long time and things do happen. Depending on the amount you will be borrowing, the difference between a 20 or 30 year fixed rate and a 10 year ARM (30 year loan with the rate fixed for the first 10 years) is not that significant in my opinion. Everyone has their own risk tolerance and idea of what "significant" is, so get the info and make your own decision whether the added risk is worth the savings. Good luck!

Nov 25th 2013
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Jedd Nabonsal (jeddnabonsal)
#520 ranked lender in California - 27 contributions

The 7/1 arm has a very attractive rate today compared to a 30 yr fixed or the ten yr fixed.The 10/1 arm is not much better than a 30 yr fixed.If you plan to sell within 10 yrs, the 7/1 arm would give the most savings over the first 7 years and, in the year 8 9 10, the rate will adjust at a fixed margin over the 1 year libor index most likely.By the end of the 7th year, you may have sold, or refinanced by then anyway. The 7/1 ARM saves you money when you need it, now.If I was to choose only between today's 30 yr fixed and a 10/1 arm, I would choose the 30 yr fixed since there is not much difference in the pricing on the 2 any way.But, if I were in your situation , I may very well choose a 7/1 arm, enjoy the 7 years of additional savings during the beginning years of ownership. You will have a better plan of what will be next, by that time, and you can plan accordingly, to sell, refinance, or stick with the adjustable depending on market conditions etc.Your income should be higher in 7 years, so affordability in the last couple years of the 10 year cycle would not be as problematic if the rate were to rise.These are the things one wants to consider.Jedd Nabonsal Los Angeles Ca 310 433 1703 jeddnabonsal@gmail.com

Nov 26th 2013
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Louis Balady (lbalady@tsmlending.com)
#108 ranked lender in Texas - 9 contributions

There is alot to consider with this question. * Yes there is more risk on an arm but you have to weigh the saving on an arm compared to a fixed rate* You also have to take loan amount into consideration. If you are over a 417k loan amount the savings on an arm compared to a fixed is going to very significant. There is alot more to consider (tax savings, your income, your tax bracket, your risk tolerance, etc......You also have to consider since 2001 approximately 72% of homeowners sell their house within 10 years and on average since 2001 homeowners refinance within 4 years. As you can see most likely something will come up where you either sell or refinance within 10 years. Please feel free to email or call me lbalady@townsquarefinancial.com 214-722-2650

Nov 26th 2013
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,876 contributions

My humble opinion is simple... If you are sure you will be moving less than the term of the fixed aspect of the adjustable loan - an ARM is awesome. If you think you may move around the time the fixed aspect ends, it is still worth doing. If you think you'll be in the house significantly longer than the fixed aspect of the loan, the risk is likely not worth it. So in you case, a 7 or 10-yr adjustable is probably a good choice.

Nov 26th 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,618 contributions

If you were considering a 5 year ARM, I would say definitely do it, however 10 year ARM pricing is not much lower than fixed rate financing right now.. which way would work out better for you, really is your decision.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Nov 26th 2013
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