Should I get an ARM when I refinance?

[vacuum]

I bought a house on 5 acres about 7 months ago.

Rates have dropped since then, I've got a mortgage guy telling me that I can save money in the short term ($300/month the first 5 years, $150 the sixth year, and by the seventh year payments will be equivalent to my current payments) for a total of 20k.

Now I'm thinking 7 years is a long time from now and especially with the possibility for inflation, using cash now will be exponentially better than in 7 years.

Does it seem like a good idea?

btw the house is in a rural location and not something I intend on selling anytime soon

[palani]

Refinance has a new meaning. The bank is telling you they don't have the original note or mortgage and offer better terms if you come in and give them a new original note/mortgage. While they might offer better terms you would be giving them another set of paperwork that they can work into derivatives and sell. This is called a "Murphy Mortgage". It cures their defect of having no standing.

If you do go for it ask to see the original note/mortgage and ask if you get them back when you refinance. If they don't have any original note/mortgage they have no standing for foreclose and you might want to ask them why you would consider sending them any more payments.

[zap]

I would get the shortest term fixed rate mortgage I could.

[Spectrism]

If the world ends in less than 5 years... or even in 7, you would be better off with the ARM. If, however, this is not the end of the world and things go on happily for another 20 or 30 years? In that case, it is unlikely that interest rates will drop this low again. I would take a fixed rate and pay it down quicker.

Look at it also this way. If you take the ARM and save $300 per month, how many years would be left if you paid that extra $300 to reduce the principal?

What are your numbers? financed amount, rate? You have to know also that we could see a time when there is no money available and the bank will come take the property. Having any loan is not good.

[Spectrism]

Refinance has a new meaning. The bank is telling you they don't have the original note or mortgage and offer better terms if you come in and give them a new original note/mortgage. While they might offer better terms you would be giving them another set of paperwork that they can work into derivatives and sell. This is called a "Murphy Mortgage". It cures their defect of having no standing.

If you do go for it ask to see the original note/mortgage and ask if you get them back when you refinance. If they don't have any original note/mortgage they have no standing for foreclose and you might want to ask them why you would consider sending them any more payments.


This too must be considered. Do not refinance with them. Get another bank to do it and insist on the original note beiong returned as a condition of the closing.

[vacuum]

This is a different bank than the one I originally used. I contacted him because someone at work recommended him.

Here's another variable: I've got 4 siblings in college right now, 2 of them are doing nursing. They will help out after they get jobs.

[chad]

no.

[ShortJohnSilver]

What are the exact terms? Sounds like a 7/1 ARM, meaning same rate for 7 years, then it can go up, but only by a max of 1% for the rest of the term.

[kregener]

Sure! You should get an ARM!

And then you should saw your legs off with piano wire, wrap them in the USA Today, and mail them to CondoLEEZA Rice.

[Cebu_4_2]

Go fixed rate, 30 or 50 years, pay the 15 year rate but you have the option of paying less if something happens, a cushion of sorts.. After the value of the dollar goes to 1¢ that mortgage will be real cheap.

Financed 7 months ago? You bet they got the note, not an option for you.

[General of Darkness]

I would get the shortest term fixed rate mortgage I could.


Exactly. 10 fixed is the way you want to go.

[Cebu_4_2]

Exactly. 10 fixed is the way you want to go.


Until you run out of job.

[Book]

no.


+1. No.

[mick silver]

fix .................................................. .......... no floating crap for me

[vacuum]

Thanks for the input guys, seems like its unanimous.

[Sparky]

No.