Updated over 3 years ago on . Most recent reply
10/6 ARM financing with 5% down
Hey BP!
Anyone care to share their experience/wisdom with using a 10/6 ARM to finance their property? Seems pretty attractive if we are talking about a 10 year fixed rate that's about 1% lower than the current conventional 30 year fixed rates.
I am considering this as an option for my next house hack purchase. My strategy would be to use a 5% down payment on a SFR and am betting that rates will have a high chance of dropping within the next 10 years, which would give me the opportunity to either lock in the lower rate or do a cash out refinance on my other property and pay off the HELOC.
What are your thoughts? Am I understanding/thinking about this the right way or is there something that I'm missing because this seems like a logical move to me. Of course I understand the main drawbacks will be the variable rate adjustable every 6 months, but I ran a worst case scenario for the rate cap, and I should be able to still cover, and if rates end up going much higher after 10 years (I don't think this is likely) so I would be in a sticky situation.
Thank you in advance as always for your responses and time!