Financing Strategies - ARM vs Fixed Rate

[Christine Tranchilla]

Hi Everyone,

I'm just starting out on my real estate journey and have been exploring financing options in St. Louis, MO. I plan to finance my properties under an LLC and currently have two banks offering ARM's. One is a 5/1 ARM with a 25 amortization and lower interest rate, the other is a 3/1 ARM with a 20 year amortization and higher interest rate (1.25% higher). At first glance, it seems like I should go with the 5/1 ARM given the lower rate. my questions for the group are:

1. Are there any other factors I should take into consideration when comparing the two that I'm overlooking?

2. Are there ways to eventually convert these into fixed rate mortgages rather than continually having the ARM reset when using an LLC?

Thanks in advance for the advice!

Christine