Buying A Home
7river7wed7
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Is an adjustable rate ever a good idea?
For example, if you needed your payment to be low now, but plan to pay off the loan within a year or two of the locked in rate period then it eliminates most of the risk, yes? I don't know much about them...are there other things to consider when looking at this type of mortgage?
Re: Is an adjustable rate ever a good idea?
In your senario, you wouldn't really have any risk if you plan to pay off your loan before your rate recalculates.
FWIW, we bought in 2003 with a 5 year ARM. Every single time our adjustment period came, our interest rate dropped, causing our mortage payments to drop each time. We probably lucked out because if the economy as I'm sure it's not the norm for that to happen.
I should also mention that we bought our house knowing it would just be a starter home for us. We planned to only be there for 5 years which is why we chose an ARM, however, we ended up not selling until this year... you can never predict the future.
With our loan, yes, there was a limit to how high the rate could go. But that amount varies from mortgage to mortgage. When choosing a mortgage, you need to specifically look at that number to make sure you are comfortable with it.
I am a processor, and I haven't seen a pre-payment penalty on a mortgage in at least three years. And every ARM has a ceiling, meaning a cap on how much your ARM can adjust. Be advised that for conventional mortgages with a five year or less adjustment, you need to qualify with your payment being 2% higher than your locked in rate, and will need to furnish several months of reserves in the bank. 7/1 ARMS do not require this. FHA do not require any reserves, and you qualify at the note rate.
Check your truth in lending disclosure that you will sign with your initial good faith, and there is a box under your APR that will indicate whether or not you have a prepayment, but I really have not seen one of these on a first mortgage in years.
I suppose if he doesn't get a job in his field right away, he will continue doing what he does now, except he'll have the time to do it full time rather than a couple days a week. We're currently living on just my income and the payment for the new property will be factored into that budget as well so at that point anything he makes is just extra we can throw at it.
It's going to be a max $200/mo payment and our current house is only 14% of my take home -- even with the extra 200 we fall well below the suggested percentage for even a first home. I don't really think you have any basis to say we're getting in over our heads.