It'll Cost You An ARM...

I was wondering if I were to use an ARM, what costs I might come across. I thought ARMs were typically cheaper to close on than fixed mortgages. Is this true? Can someone explain?
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Comments(5)

  • tinman17551st April, 2004

    The costs that are incurred in a loan are as follows:
    Bank fees: They will depend on what type of bank. All banks have different fees.
    Broker fee: These will be incurred if using a broker
    Title fees: These will depend on what state you are in. Every state has a different setup

    The loan type may permit you to have fewer or no endorsements, Title regulations, ect.

    Actually an arm mortgage note has more pages than a fixed note. Because they usually have a ryder on it. Which wuold mean if you are being charged by the page to record it would be more.

    Another thing that reduces costs in a loan is the LTV you are requesting. Anything lower than 50% is the lowest, then 70% and under. 71% to 79%-80%
    81% to 89.9%, 90% to 94.9%, 95% to 97,
    then 100%, 103% 107%,115%, and 125%.

    They mostly affect costs on a loan. the more equity you are using the more it will cost you.

    Neg am, interest only, libor mortgages are run about the same for fees. There might be one bank a little better but nothing major.

    Lori

    Lori
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  • commercialking1st April, 2004

    rates are the lowest they've been in 40 years. Forget arms lock in this cheap money. Unless you're going to be out of the deal inside three years.

    mark

  • ddemott1st April, 2004

    Its a flip so yes.. I'll be out in short order

  • tinman17551st April, 2004

    If you are going to flip make sure the arm doesn't have a prepayment penalty. Most arms do.
    That is why the rate is lower

    Lori
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  • monkfish1st April, 2004

    If you're going to flip you want the lowest payments possible.

    In which case you want an interest only loan, or what some banks are calling a 1 month option ARM.

    Washinton Mutual has one, with a current rate of 1.5%.

    You also want to try rolling your closing costs into the loan.

    Plus, make sure there are no prepayment penalties. Some banks charge 2%.

    Ouch!

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