October 6th, 2010 3:47 PM by Eric Fang
I locked a rate for my client who has a 417k cash-out rentalloan. 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 forrental than primary/2nd homes. Even though the rental ARM ratesstill higher than primary, but after 7 years, the reset ratewill 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 yearsrate 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.