Mortgage Blog

I locked a rate for my client who has a 417k cash-out rental
loan. And he decided to go with 7/1ARM for the rate of 3.875%
with no closing cost at all.

I did mention to her that usually rental rates for higher for
rental than primary/2nd homes. Even though the rental ARM rates
still higher than primary, but after 7 years, the reset rate
will be the same as primary(Let's say if you have 3.375%
for primary, 3.875% for rental with 7/1ARM now; but 7 years
rate at the reset they will have the same rate).

This is the advantage of the ARM program for rentals. Especially when he decided to keep the home for only a few years.