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purchasing a small vacation home with plans sell primary home in the future. Does a 5yr.ARM make sen

Purchasing a small vacation home with plans to sell primary home in the future. Does a 5yr ARM make sense?
  • April 15 2011 - Berlin
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Answers (4)

Maybe but to make the decision easy, just go with the fixed rate as rates are so low anyway.  If you are planning on paying it off when you sell the other house, the savings difference in the short term is not worth the added stress especially if it's "small".
  • April 16 2011
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You should take to your tax cpa. They have no interest in selling you anything. They would know you financial situation best. Your smart enough to seek information, now go to the pro who knows you.
  • April 15 2011
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Will you be able to sell your old house before the ARM resets for the amount you want to get from it?

If yes the arm could make sense if you pay the new mortgage off at the sale. If no the ARM is a horrible idea.

As you do not really know that you can sell the house for what you want from it getting a fixed rate mortgage is your smartest bet. When an ARM resets and you have to pay extra each month the fixed rate mortgage looks very smart.

House prices are still falling in most of the nation. The house could easily lose more value in time.

Take a look at the site below for house price predictions.
Maryland


  • April 15 2011
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Profile picture for Clearpoint
Are you going to sell your primary within 5 years and have enough equity to pay off the second home?  If not are you ok with an adjustable rate after the 5 year period? 
  • April 15 2011
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