Loading…
16
Compared fixed rate to ARM for my condo refi and it was not even close
I was looking at a 30-year fixed at 6.8% and a 7/1 ARM at 5.9% for my place in Austin. My plan was to sell in about 5 years, so the lower rate seemed tempting. But after I ran the numbers with a $280k loan, the ARM would save me $150 a month but could jump way higher if I stayed past year 7. The fixed rate felt safer even if I paid a bit more now. Anyone else been burned by an ARM when their timeline changed?
3 comments
Log in to join the discussion
Log In3 Comments
margaret5511mo ago
My buddy did almost the same thing with his condo in Denver a few years back. Took a 5/1 ARM at like 4% planning to move after 3 years. Then he got a promotion and decided to stay, and when that ARM adjusted it went to 7.5% and his payment jumped almost 400 bucks. He ended up stuck for another 2 years because the market slowed down and he couldn't sell without losing money.
8
ben_fisher1mo ago
Yeah that's a tough break. The 5/1 ARM is a gamble and it doesn't always pay off. People forget those rates can climb fast. Did he end up refinancing eventually or just ride it out?
3
martinez.paul1mo ago
Stuck for another 2 years" is brutal. Did he try renting it out at all to cover the higher payment, or was the HOA too strict?
2