What are the benefits of getting a 5/1 ARM now?

ARM rates are typically lower by as much as 3/4 to a full point, so you get to start off with the lower rate.. and it's fixed for the first 5 years.. So long as you are aware of how the ARM rates work, it's really up to you and your level of acceptable risk as to whether or not it's for you.. If you know you will move in the next 5 to 7 years a 5/1 ARM would be a great option.. the rate is fixed for the first 5 years, and it cannot increase more than 2 points at any given year.. If you have the maximum 2 point increase 2 years in a row, you would still be better off with the ARM since you have already saved nearly a point over the last 5 years.. I like ARM rates, I think they are safe, and when used properly, allow you to maximize your purchase potential all the while paying the lowest possible amount of interest.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

An ARM would be best if you are not planning to stay in the home for longer than 5 years, otherwise you would be better off with a fixed rate.

I would agree with William and Michael but would add this caution. ARM's are great products but keep in mind that the liklihood of rates being higher 5 years from now are substantial and if that's the case, your rate will increase accordingly. Feel free to call me to discuss in more detail. 970-232-2976

ARM rates today are a good option as you will get a much lower interest rate. However, it will depend on your short term and long term goals. If this is your last home and you don't have plans of moving you will have to address a possible refinance in 5 to 7 years. The risk of course is we have no idea what rates will be then. But the savings you will receive over the next 5 to 7 years could be enough to justify it. If you think you might have a change and move in the next 5 to 7 years you should really consider the ARM because you will save over a fixed 30-year at this time. I'm sure your husband has many options for loan officers, but if you would like me to provide you a few options let me know. Best wishes, Sean / loanofficerseanyoung@gmail.com / 303-521-7169

ARM's are good products and if you understand what the MAX rate is for the lifetime of the loan and if you can handle the payments when they adjust. Most of our clients will look at the worse case scenario and if they can handle that with ease then they go with an ARM. You do save on interest because you start lower but some people just aren't comfortable with any adjustments so it really comes down to a personal preference. If you know you won't be in the house for more than 5 years than it is a no brainer to go with an ARM but if you aren't sure just make sure to look at all the numbers and decide that way. Bankrate.com has some really good mortgage calculators to help figure it out.

Just my two cents based on your reply that you are going to retire there, I would strongly suggest you go with the fixed rate mortgage in your situation. You would be going into an ARM when rates are not at, but near, their lowest point in the last two decades. Couple that with the historic amount of government spending over the last 8 years and the inevitble end of quantiative easing and rates going up from here is not a question of "if" but "when" and it's my bet they are going to go high and stay high for some time. If rate are lower 5 years from now, refinance to the lower rate and we have program that allows you to refinace for however many years you want to refinance meaning if you have 26 years left we can set the term at 26 years rather than staring over at 30.

Sorry, Denise, let me correct a mis-statement, mortgage rates are not near their lowest point in the last two decades, they are near their lowest point in history as it relates to this industry. If it's my money, I am betting that the liklihood of them going up from here and staying higher, far exceeds the chances of them going lower and staying lower. If you were very confident you were moving before the adjustment period came, I would suggest that the ARM is a highly attractive option, but not in your situation.

Denise: It's a "risk reward". The ARM % rate might be a little better, so with a larger loan amount your savings $'s are greater. The 30 year fixed is zero risk but a slightly higher % rate. If we all had a crystal ball, then we'd be retired on a beach in Grand Cayman or Belize, so who is to say what % rates will be in 5 years? That is why the stock market has both "bears & bulls" / and the California real estate market goes up and down. Did we just come off of a 3.50% 30 year fixed = YES. Did 30 year % rates just increase to 4.50% ish = YES. Are they some of the lowest % rates that we have seen in mortgage history = YES. Click on my profile to the left, then click on my email and tell me what your loan amount is, and I'll show you the difference between the 5/1 ARM and a 30 year fixed in the morning. Thanks...Jeff

Denise: What we all strive to do is to listen to what YOU have to tell us, and make the recommendation of "the right loan, for the right person, at the right time in their lives." The ARM's can be a positive, and we have a 3-5-7-10 year ARM's to choose from. It isnt that there is a "right vs wrong" decision to be made - comparing your husband's 5/1 ARM to a 30 year fixed is what we do. If % rates are stable then it is an easy decision, but I have NOT met anyone who can predict the future, and yes - "hindsight is 20/20" but we all make decisions that are based upon our "due diligence." Click on my profile to the left adn call or email me - let's talk. Or have your husband call me! Thanks...Jeff