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15/6 ARM vs. 30 year fixed

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  • 15/6 ARM vs. 30 year fixed

    Hello,
    I am under contract for a new construction house and am looking at mortgage options now.
    Builder affiliated lender offered option of 15/6mo ARM 2.875% vs. 30 year fixed 3.875%.
    Which would be a better option? I will be staying there for the foreseeable future, at least 5-10 years.
    Thank you

  • #2
    If you're truly know <15yrs, that's your answer. could regret it at 12 year mark; but we all have varying success on calling what's 15 years down the line. We've been in three homes over that past 15 years.

    What's a 15year fixed getting you compared to a 15/6?

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    • #3
      15/6 sounds like the clear winner here.

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      • #4
        Can the 15 year mortgage be adjusted up every 6m for the next 15 years ?

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        • #5
          I'd take the 30 year fixed to make the risk curve flatter. 15 years out is hard to predict either way. What's the monthly payment difference?

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          • #6
            I'd take the 15/6 and pay it off in 15.

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            • #7
              thank you

              Monthly payment is similar but 30 yr fixed requires 20% down, whereas 15/6 is 11% down.
              We are leaning towards 15/6 but am considering worst case scenarios..which sounds like refinancing at a higher rate but yeah 15 years is too far out to really predict the market or my financial situation at that time.

              One more question: Should I use points to reduce the rate? (1% of loan to buy down .25)

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              • #8
                You'd have to figure out the break even, but I wouldn't do it if you don't anticipate living here past 10 years. I think people need to remember that these rates (whichever one you pick) are still historically low.

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                • #9
                  mcthemax could you share the lender you used? looking for construction lenders. thank you!

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