5 Year Arm: Opinions?

[Sean Kuhn]

I'm working with a portfolio lender on two 5 Year 30 Amor. Arms with a fixed interest rate the first five years. I plan to have them paid off before 5 years. Down payment is 25% with an interest rate of 5.65. I've only ever done conventional before this and this sounds like a great deal to me. I only qualify for FNMA loans and I hate working with them. What do you guys think? Are these rates and downpayment typical for this type of loan? I had one other quote for 40% down, interest of 6.9% and that sounded way too much to me.

[Bill Gulley]

Yes, you can lose ten pounds and thousands of dollars might be a great deal for one night in jail, especially if you sleep like a rock

Put up with the nightmare, which isn't that bad, and get a better loan from Fannie.

With portfolio ARM loans you need to look at the floor and the ceiling rates, how far down it can go and how far up or the cap rate. You need to look at the index and do some research to see how volatile the index is. Then look at the margin, the spread between the index rate and the note rate. Then ask that lender what % of their loans are kept and how many are renewed. They have to tell you what they keep. Look at the APR to compare.

If you can, I'd say get a 30 year fixed right now! :)