younginvestor2013
Recycles dryer sheets
- Joined
- Feb 6, 2013
- Messages
- 226
Hello all,
I closed on a condo in April of this year. Since it is a condo (and rates are a tad higher on condo mortgages), I closed with a 4.5% fixed 30 year mortgage.
My mortgage broker at the time asked if I was interested in a 5/1 or 7/1 ARM given that my condo is small (1 bedroom) and I am young (25) and therefore may not be there more than 5 or 7 years.
At the time, I brushed that off and viewed this as a long term hold. Don't get me wrong, I don't regret my purchase, but my condo is small (900 sq feet) and I can't see myself living with anyone else (i.e., future SO) in the place since it is so small. If we did share the unit, I'd prefer it to be only for a short time.
Given that I don't want to be/plan to be single my entire life, I may move in the future. I have not yet talked to my mortgage banker, but a "back of the envelope" test shows that I can save $100-$150 a month on my mortgage by going the ARM route.
Based on my mortgage of about $167K, and a conservative 3.5% rate for a 5/1 ARM vs my current 4.5% rate, the difference is about $100 a month. I think I could even get a lower rate, but not sure (just used 3.5% because bankrate.com shows the avg 5/1 ARM to be 3.28% today).
What do you think? I am not sure of what the closing costs would be, but a $1,200 yearly savings sounds enticing. If the closing costs are cheap, I could potentially just pay them out of my current (albeit small) equity I've built up since the spring.
I closed on a condo in April of this year. Since it is a condo (and rates are a tad higher on condo mortgages), I closed with a 4.5% fixed 30 year mortgage.
My mortgage broker at the time asked if I was interested in a 5/1 or 7/1 ARM given that my condo is small (1 bedroom) and I am young (25) and therefore may not be there more than 5 or 7 years.
At the time, I brushed that off and viewed this as a long term hold. Don't get me wrong, I don't regret my purchase, but my condo is small (900 sq feet) and I can't see myself living with anyone else (i.e., future SO) in the place since it is so small. If we did share the unit, I'd prefer it to be only for a short time.
Given that I don't want to be/plan to be single my entire life, I may move in the future. I have not yet talked to my mortgage banker, but a "back of the envelope" test shows that I can save $100-$150 a month on my mortgage by going the ARM route.
Based on my mortgage of about $167K, and a conservative 3.5% rate for a 5/1 ARM vs my current 4.5% rate, the difference is about $100 a month. I think I could even get a lower rate, but not sure (just used 3.5% because bankrate.com shows the avg 5/1 ARM to be 3.28% today).
What do you think? I am not sure of what the closing costs would be, but a $1,200 yearly savings sounds enticing. If the closing costs are cheap, I could potentially just pay them out of my current (albeit small) equity I've built up since the spring.