Each week, government-backed Freddie Mac publishes a weekly mortgage rate average compiled from 125 banks across the country. Based on this week's survey results, home buyers in California would be silly to not at least consider the 5-year ARM.
The 5-Year ARM Is A Steal-Of-A-Deal Right Now
As compared to the 30-year fixed, the 5-year ARM is an absolute steal.
Consider this comparison:
•In April 2009, the two products ran neck-and-neck with respect to interest rates
•In April 2010, the two products are split by 0.99 percent chasm
On a $300,000 home loan, that's a difference of $176 per month on a mortgage payment.
Some Folks Are A Perfect Fit For The 5-Year ARM
Now, adjustable-rate mortgages aren't suitable for everyone, but they can be a terrific fit given your individual circumstance. For example, any of the following scenarios might warrant a 5-year ARM instead of a 30-year fixed:
1.You're buying a home and plan to sell it within the next 5 years
2.Your home is currently financed with a 30-year fixed mortgage and you have plans to sell your home within the next 5 years
3.You have an ARM now and want to get a "restart" on your starter rate
Before opting an ARM, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist. The savings may be tempting, but there's more to consider than just the payment.
How To Apply For A 5-Year ARM At 3.875 Percent
To inquire about a 5-year ARM, call my office at 510-799-1400 or 800-259-3424 or send me an email. We can review your situation and if the ARM isn't too risky for your goals, we'll move on to an official application and start working toward closing.
Most new mortgages are closing in 3 weeks.
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John Payne is an active loan officer. Email John@JohnPayneLending.com or call 510-799-1400 or 800-259-3424.
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