Beginning a new a build in late May/early June. Considering options for the 10/1 ARM or 30 yr. 50bps difference between the two. My bet is that rates will be lower over the next 10 years so I can refinance. No one has a crystal ball, but welcome thoughts on proceeding with the ARM vs 30 yr.

GBMont3 said:

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Team ARM here, I like the odds that you get to refinance at a preferable rate sometime in the next decade. Plus, what are the odds you're still in the house then? Certainly <100%.

If rates go against you you'll at least have 10 years of amortization + appreciation to give you an equity cushion and mitigate cash flow impact, if that's still a concern at that time.

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Yep.

Appreciate it guys

In this scenario - I am team ARM here, is it cheaper than the 30YR?

I didn't ask about pricing differences between the two - just focused on rates. Do they typically vary significantly between ARMs and conventional 30yr?

Also, welcome additional opinions on negotiating. In this current market, are lenders more willing to negotiate on fees?

you definitely want to check the total cost between the 2 and check with multiple brokers. these things can vary sometimes significantly.

I went with the 10/1 ARM in September. Options at the time were a 4.37% ARM or a 30yr that was above 5%

Assume you do both and do a "what if" for both best case scenarios and for both worst case scenarios. Is the very best case scenario worth the risk of the worst case scenario? Could you reasonably survive the worst case scenario?

Mtg rates are about historic average. In my lifetime we've seen rates as high as 16% to 18%. Home values will be negatively impacted with significantly higher rates. Many folks won't qualify for refinancing in those scenarios and will either default or be forced into a fire sale.

In short, just make sure you have a clear understanding of what risks you are taking for what reward. If it makes sense for your specific circumstances, then take the risk. If not, know that your mortgage won't keep you up at night.

So the amortization is 30 and the lock is 10? Id be pretty comfortable with that. Biggest risk could be being forced into a refinance just at the time that you actually start to pay down your loan. That's only a problem if rates don't fall and you keep the house longterm. I kinda feel that people need to have a longer time frame than the old 3-5 year plan.

Went with the 10/1 on our custom. Some good lenders on here to talk with if you're not already!