5/1 ARM at a Cost of One Point: 3.75%*
Many of our lenders are pushing their 5/1 ARMs. As indicated by the above quote, the best 5/1 ARM rate is currently about 1% less than the 30 year rate. The payment for a $200,000 loan at 5.75% is about $1,046 per month. The payment for $200,000 at 3.75% is about $926 per month. The 5/1 ARM saves about $120 per month.
We still do not think 5/1 ARMs are advisable, despite the savings, even if a buyer has a short-term horizon. The reason is that many analysts anticipate inflation and far higher rates in the future. Tying a home to a low-rate, 30 year fixed rate mortgage can make that home far more valuable in the future. Even if the loan is not assumable, a “wrap around” mortgage may be an option. Feel free to contact us for more information.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167