Mortgage Blog

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 around
3.5%. 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 the
following.

2)Sometimes, it will be hard for condo to refi.
Most of my failed loans are condos.
a)If the condo has letigation, then most
of the lenders will not get you loans.
b)If non-completed new community, some
lenders will not lend you money.
c)If too many units rented out, some
lenders will not qualify you the loan.
d)Condo values uusally drop faster than
single family.

In one word, condo can not refi not because
of the borrower, it's because of the condo
HOA as a whole, which you can not control.

And you don't want to be stuck in an ARM
loan when that heppens.

It's another story if you handle the risk