Mortgage rates

[purecarnagge]

I'm a first time homeowner attempting to buy my own place this summer. Anyone find anything better or suggest a better product that I might be overlooking

Here is what my bank is offering

10/1 ARM (new product)

Its locked rate that can't move for 10 years at 5.25. Fixed rates are almost at 6% and because I'm buying a townhome I will have problems with approval due to the phase not being near 90% completion. Its at 60% (overall development being finished). So I can get a ARM no problem but a fixed rate would be harder without the development phase being completed.

I'm thinking this is a pretty good deal. As I plan to be out of this new place worst case scenario in 7 years... More than likely 5 years.

Figured there would be someone who works in the financial sector that could contribute something on this.

Thanks for the help.

[purecarnagge]

anyone here in the financial sector able to chip in any advice?

[capitalist pig]

I dont work in the $ sector,Im in the construction side of townhomes/condos. Id stay away from arms,JMO. Sh1t happens, and what happens if you dont get out in your time frame? Whats the rate go to then? How many years is this for 20-30?

Why cant you just wait till its closer to the 90% completion rate? Plus what makes you sure you can get out in your time frame with a profit?

Im sure there must be a penalty if you break out of that arm within that 10 year rate period.Thats the 1st question id find an answer to. Then id want to know what are the Community Association fees, most townhomes have homeowner associations and you will have quarterly fees, not to mention assesments if anything needs doing on the complexes property.

Other than that congratulations on your 1st home purchase.

Later

[Cash]

I'm a Financial Advisor for a large brokerage. Sounds good. You might want to check to see if there is a pre-pay penalty. Rates should stay low for the rest of the year. Atleast until Bush leaves office. Good Luck

[purecarnagge]

I'm checking into the refinance questions. We plan on refinancing it later on maybe 5 years down the road if we think we would be there longer than 10 years.

We want to build equity instead of paying rent. Our lease is up at the end of July. The area we are targeting is a very competitive market. 3 bedroom 2 bath 2 stall garage with 80.00 associate fee.

Similar condo's/townhomes in the area were built at 99k in 1999 and they are being sold at 144k on market today. Most actually go for around 132k to 138k. I know this isn't alot of money by some standards. But the cost of living in Iowa is rather cheap compared elsewhere.

As long as we gain value or only end up paying back the realtor comissions when we go to sell we are ok with that. I will take the 1 year of rent I won't see again give it to the realtor and have the remaining years actually build equity for me.

When we go to sell I would imagine selling this property for 145k range when it all said and done. It's in a quiet area and its 2 minutes from a major hwy. Its 20 mins from the north major city in the "corridor" and 5 minutes north of the south city in the "corridor". Easy access to hwy and quiet area will be good value. also nothing else compareable to the builders quality, reconigtion and in that price range is that close to the hwy. The southern area of that corridor is the more expensive price range due to the University and Hospitals that bring in alot of people.

Our goal is to be able to gain some equity in something and afford a better house with in 10 years.

[Cash]

Over the long run 5+ years Real Estate has always been a very good investment. Sounds like a nice place.

[Wheell]

cash: long run = 5 years? I almost threw up in my mouth. Real estate prices are fully capable of being a roller coaster. Furthermore ARM's seem fairly awful to me for a variety of reasons. If rates drastically go down you should always be able to refinance. Should rates drastically go up it is much better to be locked in.

[stump]

get a fixed rate mortgage. fixed rates are still very low, no reason to screw with an ARM, things change and in 10 yrs from now you can be stuck.

[ChuteBoxe]

One of my best friends is a top notch broker that helps people way more than screw them. He always advises against ARMs due to the fact he feels you're always chasing your payment. A lot of shady brokers will try to get you to go with the ARM, because the payment looks great, and you're more likely to sign the paperwork quicker. If the rates go up though, you're pretty screwed. If you want, I could hook you up with the number of his company, so you can include them as an option in your rate shopping. Let me know.