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Is 5-ARM a good plan for me?

I have this 3 BR condo in 91606, owe to Wells Fargo 309K. It's value should be around 345K due to remodeling I did in 2007. Currently have a 23yr fixed rate mortgage , principal and interest with rate of 4.18% so pay 1996$ including the tax property monthly. I'd like to bring the monthly pay to 1500$ because of job problems. Is a 5-ARM a right plan comparing to what I have?
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December 29 2013 - North Hollywood
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No. A 5/1 ARM would not lower your payment much with your current 4.125% (4.18% not available as rate). You didn't mention Mortgage Ins which you would have on a new loan. Best reason to keep your current loan is if at end of 5 yrs if you were not ready or able to sell condo, leasing with 4.125% rate would be beneficial. Year 6,7, 8 etc adjustments could be brutal with ARM.
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January 26
Profile picture for SteadyState
I would not exchange your current mortgage for a 5-year ARM. You will take on the risk of higher interest rates and are effectively betting against the banks - do you think you can bet against them and win?
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January 26

A 5 year may be a good option if it lowers your payments and you only intend to own the unit for so long.  If you plan to keep it it long term and you can reduce your payment enough, you may want to keep your existing loan in place.  It could prove to e a very solid investment long term at the current interest rate.

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January 26
I would advise you to stick with your current mortgage for two reasons. The first reason is I agree with what others have said regarding the interest rates likely being higher in 5 years when the 5/1 Adjustable Rate Mortgage adjusts. Secondly, your loan-to-value is approximately 90% according to how much you feel the property is worth. This means you will have to pay mortgage insurance in addition to your mortgage payment. If this is an investment property, the mortgage insurance will be over 1% of the loan amount. That's at least an additional $260 per month. Your total mortgage payment will not be much lower than what you are currently paying now when it's all said and done. Hope this helps.
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December 31 2013

Only even consider the 5 year arm if you know deffinately you are going to sell or get rid of the house in 5 years. Rates are rising as we speak, who knows where they are going to be in 5 years. My guess is no where close to where they are right now. Even if you decided to keep the property and refinance back into a 30 year fixed who knows how much your rate will go up, no to mention how much it will rise once the adjustable kicks in. Arms are very dangers and can cause borrowers to loose their homes. You're much safer keeping what you have. If your having major job problems and your house is worth that much, sell it and take the 40k and put a downpayment on another house you can afford!

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December 31 2013
I'm assuming you have a 4% note rate, 4.18% APR. 5/1 ARMs are approaching 4% right now so I would say absolutely not, regardless of whether you plan to sell in 5 years. 
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December 31 2013
Profile picture for sunnyview
NO! Keep the 4.18 you have and do not roll the dice with a 5 year ARM. If you can't afford to keep the house, sell it now or bring in a renter to help lower your monthly. The initial lower ARM payment is a trap in your situation.
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December 31 2013
I don't think so,but it would be in your best interest to sit down with a good loan officer and go over all the figures carefully.
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December 30 2013
Profile picture for SteadyState
If you can pay off the home within 5 years than you can consider the 5 year ARM.
In general it is a very bad time to bet against higher interest rates so your payments are likely to balloon as interest rates go up further.
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December 30 2013
no, simply no
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December 29 2013
Yes - if you plan to move within next 5 years No - if you plan to keep property longer than 5 years
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December 29 2013
It depends on if you plan to own the condo for more than five years. The short term benefit from ARM could lead to a tough situation when the initial period has completed. It also appears that you will have to add mortgage insurance to your new loan while the existing loan does not require this. If you are in a bind for monthly cash flow, ithe ARM is worth exploring but you must be cautious and incorporate your long term plans into the decision.
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December 29 2013
The 5/1 would bring your payment down however the rates are at historical lows right now so five years from now if rates go up to even 6% then you will never see that 1996 payment again.
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December 29 2013
I suggest you contact a few different lenders to compare programs. Good luck! Best, Susan Bo'ur Realtor/Coldwell Banker
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December 29 2013
 
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