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Are 10/1 ARM loans a good idea right now?

I'm wondering if it's a good time to go with a 10/1 ARM- will housing prices be back up a bit by 10 years? Will interest rates be lower or around the same in the next few years?
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August 30 2009 - Cypress
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Answers (9)

Profile picture for shapiroamg
You are getting a loan modification so the choice is take it or leave it? What stopping you from prepaying the loan once you have the mod?
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November 30 2012
Profile picture for user768612

Just received a Loan Modification from Wells Fargo and they are offering me to lower my interest rate in my mortgage from 6.875% (current rate in a 30 year fixed) to 4.625%, BUT in a 40 year fixed? Is this really an option? I personally am having heart burn thinking of the 40 years...I for sure won't be around to see my home paid off. I would like to keep my home loan to a 30 year fixed, but see the interest rate lowered from what I currently have. Any suggestions? Is a 40 year loan at all helpful?

Going from the 30 year fixed to a 40 year fixed only dropped my monthly payments from $2,518 to $2,116… 

Angel.

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November 30 2012
take the 30 yr. You will be very happy after you see fannie buy freddie.
and rates increase by 5 %
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September 01 2009
It's tough to say what rates will do at any given point.  Rates change daily, sometimes several times throughout the day.  There is no way of telling what rates will look like in 10 years.  However, it's fairly safe to assume we won't see rates like we did back in March/April for another 40-50 years. Those were once-in-a-lifetime rates.

As for home values, I agree with Rudi.  Home values will begin to increase again over the next 10 years, probably sooner rather than later.

If your intersted in a 10/1, your best bet is to refinance into a 30-year fixed.  If your interested in a 5/1 or 7/1, the rates would be substantially less.  For example, a 5/1 conforming ARM is approximately 3.875% or 4% today, paying no points.

Best of luck!

Regards,
Total Mortgage Services
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September 01 2009
10/1 is running up to 1/2% lower than the 30 fixed; if you're going to spend the next 10 years worrying about it, save the sleepless nights and get a 30 fixed; however if you're as most and won't have the loan more than 5 to 7 years anyhow; it's worth looking into.
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August 30 2009
Take a look at the 7/1 ARM
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August 30 2009
On a conforming loan a 10/1 is currently only 0.125% less than a 30F. On a jumbo loan about 0.375% less than a 30F. In both cases I would suggest going wih the 30F.

The Federal Government is suppose to stop buying MBS at the end of this year. If that does happen rates surely will start going up.

Fannie/Freddie and maybe FHA/VA may disolve into one Federal entity. Guidelines might become stricter than they are today and fees may continue to rise.

You probably won't see your home valued as it was in 2006/2007 for about 20 years. You will see some improvement in value within the next 10 years. .... Karmac has spoken.
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August 30 2009
Let me consult my crystal ball.....

Just kidding but nobody knows what the market and rates are going to be like in 10 years. That's just too far into the future to even guesstimate.

One thing I do know is that we have not hit bottom with the current real estate mess and the next few years are going to define the next 100 years as far as laws and regulations because they are not going to let this mess repeat itself.






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August 30 2009
10/1 pricing is not great so there would be no value in this. There may be some merit to a shorter period ARM under the right circumstances and with the right qualifications and guidance, but not with a 10/1 currently. 

No one can answer what interest rates will be like in a few years and that is really not a criteria you should be weighing in deciding whether you should take an adjustable rate mortgage. 
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August 30 2009
 
Related Questions
Are 10/1 ARM loans a good idea right now?
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Latest answer by shapiroamg
November 30 2012 | 9 answers
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