June 14th, 2011 10:35 PM by Eric Fang
I have a condo with purchase price 400k, loan 300k.The current rate is 4.625% for 30 yr fixed. We are interested in 5/1ARM or 7/1ARM rate?What do you suggest?
Usually I would recommend longer term for condo.Unless you would really realy want to have low 5/1ARM or 7/1 ARM.
1)If you want to have no cost loans, you can get the rate 5/1ARM around 3% and 7/1ARM around3.5%. You will get better rates when the market is good. So it's up to you whether you want to refi those ARM rates. BUt read thefollowing.
2)Sometimes, it will be hard for condo to refi.Most of my failed loans are condos.a)If the condo has letigation, then mostof the lenders will not get you loans.b)If non-completed new community, somelenders will not lend you money.c)If too many units rented out, somelenders will not qualify you the loan.d)Condo values uusally drop faster than single family.
In one word, condo can not refi not becauseof the borrower, it's because of the condoHOA as a whole, which you can not control.
And you don't want to be stuck in an ARMloan when that heppens.
It's another story if you handle the risk