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Scared To Death Buying a First Home!!!

Darkstar757

Darkstar757

Diamond Member
Ok Here is the deal.


the 5/1 Arm is 5.35% and the fixed is 6.25%


The difference between the monthly notes is $620 bucks a month.

Where is the Arm is $620 cheaper a month than the fixed. Thing is im scared of the market and dont want to get burned.


Can someone give a newbie some help!!!


Thanks,
Darkstar
 
thats a hell of a difference. Interests rates typically climb and you can always take out a 2nd mortgage if the rates drop enough to warrant the hit, and get some home equity money as well. I'd vote for the fixed APR, you dont want a repeat of whats happening right now with the housing market, do you?
 
Originally posted by: XZeroII
Odds are, interest rates are going to soar in the next few years. Get the fixed.
Click to expand...



Yep. Unless you plan to sell in 5years or less then the fixed is the way to go. And with the market the way it is right now I would not buy if you plan to sell in a short period.

Fixed % FTW
 
FIXED FIXED FIXED FIXED FIXED

A big part of all the housing problems right now was due to people taking ARM's who couldn't afford the higher rates.

Knowing what your payment will be each and every month is a very sound thing to do IMO. Sure, the rates might go down, but the risk is just too great that they will go up.
 
meh to each their own but i would prob. check out a 7/1 ARM and either...

1. invest the savings in other vehicles
2. pay down the loan like it was a 30-year

but whatever
 
If you feel you can handle the higher payment 6 years from now when the lowest rate is 9.25....gamble
 
something isn't right..no way a less than 1 pt diff can equal to $620/month diff..unless you are buying a million $+ mcmansion home.
 
Fixed. You can't predict the future (rates, your income, living situation) and an ARM at this point is really, really, really dumb.
 
I would never touch an ARM as a matter of principle, but now is especially bad in my opinion given as rates are low now, and the outlook for things like energy and food would lead me to expect considerable inflation and interest rates in the next few years.
 
I was excited when we bought our house.

Went 30 year because rates were so low and we had no idea how long we'd be here. Turns out we made a great decision as it's been 6 years and we have no plans of moving.
 
Originally posted by: OdiN
If you can't afford the fixed rate, then don't buy a house.
Click to expand...

QFT. A big part of the housing crisis was caused by people taking those cheap rates on an ARM. Unless you can afford to have your payment double you want to stay away from that.
 
Originally posted by: Bignate603
Originally posted by: OdiN
If you can't afford the fixed rate, then don't buy a house.
Click to expand...

QFT. A big part of the housing crisis was caused by people taking those cheap rates on an ARM. Unless you can afford to have your payment double you want to stay away from that.
Click to expand...

Being able to afford a fixed rate and choosing to go with a fixed rate are two totally different beasts.

Some people like being able to leverage their debt in different ways.

Debt is not always a bad thing.
 
Originally posted by: binister
Originally posted by: Bignate603
Originally posted by: OdiN
If you can't afford the fixed rate, then don't buy a house.
Click to expand...

QFT. A big part of the housing crisis was caused by people taking those cheap rates on an ARM. Unless you can afford to have your payment double you want to stay away from that.
Click to expand...

Being able to afford a fixed rate and choosing to go with a fixed rate are two totally different beasts.

Some people like being able to leverage their debt in different ways.

Debt is not always a bad thing.
Click to expand...

Interest rates are lower than they've been in a LONG time. There's only one direction they can go.

I'll give you a hint, it's not down...
 
Originally posted by: richardycc
something isn't right..no way a less than 1 pt diff can equal to $620/month diff..unless you are buying a million $+ mcmansion home.
Click to expand...

Yeah. Are you borrowing more than $1M? If not, something is off.

I do not know the future, but I think interest rates are going up. If you plan to be there for a while an ARM will likely reset a chunk higher than 6.25% with no hope to refinance for less. Likely better to lock in a good rate now. If you can't afford the fixed rate now, will you be able to afford a rate higher than that in five years?

If you don't plan on being there a while you may want to rent and/or delay a home purchase.

I'm sure glad I have a fixed rate loan.

 
What are the penalties like on the fixed if you want to change to another provider with lower rate after a few years (say 10), if you could get a lower rate/what are the early pay off fees?
Fixed is better, but you might want to see what other fixed rates are like and what penalties or otherwise they have associated with them.

No point in getting a 6.25% fixed now and then having rates drop and being unable to switch to anything else without a huge penalty.
 
Looks like im going Fixed FTW I will find out about refinancing penalties soon. My gut tells me rates arent going down any time soon.

Thanks guys!!! Keep the great info coming.


Darkstar
 
There should be no penalties. It's just a loan and as long as the bank gets their money for the loan, they don't care what you do.
 
Originally posted by: Lonyo
What are the penalties like on the fixed if you want to change to another provider with lower rate after a few years (say 10), if you could get a lower rate/what are the early pay off fees?
Fixed is better, but you might want to see what other fixed rates are like and what penalties or otherwise they have associated with them.

No point in getting a 6.25% fixed now and then having rates drop and being unable to switch to anything else without a huge penalty.
Click to expand...

Any mortgage that a bank wants to be able to resell will not have any penalties for paying-off early or refinance.
 
Originally posted by: Lonyo
What are the penalties like on the fixed if you want to change to another provider with lower rate after a few years (say 10), if you could get a lower rate/what are the early pay off fees?
Fixed is better, but you might want to see what other fixed rates are like and what penalties or otherwise they have associated with them.

No point in getting a 6.25% fixed now and then having rates drop and being unable to switch to anything else without a huge penalty.
Click to expand...

Penalties? What is this a cell-phone contract? Just refinance.
 
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