MORTGAGE QUESTION: 5/1 ARM or Option ARM

[chrisngo]

Anyone get into a house recently (in So Cal preferred)?

I am doing a refi on my first house...I have Option ARM loan docs in front of me ready to sign. I know this will help on cash flow, but it's also a neg am if I pay minimums. Is this also the case with a 5/1 ARM?

Useful information...
I do not plan to spend my life in this house.
It is possible that I will keep this as a rental, since it is near a college.
I do see my financial situation improving yearly.

Please help me understand what would be best for me.

Thank you
Chris

[VIPQ45]

Option arm is totallly different from 5/1 ARM

Option arm is a negative amortization that unpaid interest is going back into the principal

Where 5/1 is a 5 year fixed princial + interest payment and after 5 years it will be a floating interest rate (interest rate changes once a year in this situation)

So if you can afford a 5/1 Arm payment, I recommend going for a 5/1 Arm.

Hit me up or PM me if you have more questions.

[tougebear]

Sup Chris,

Have they quoted you the interest rate on the 5/1? Rates are higher right now so I would actually consider the Option ARM over this, especially since you're saying that you're not planning on keeping the property.

Also, which lender are you going with for the Option Arm program? I've worked with numerous "Option" lenders so I might be able to clear up some things if you want.

Edwin

[Wald GS]

I highly recommend TougeBear! ;D