No announcement yet.

ARM in this market

  • Filter
  • Time
  • Show
Clear All
new posts

  • ARM in this market

    I received an offer for 4.75% 10/1 ARM, 0.5% lock in fee (~$4,000) until Feb 15, 2023; 0.25% additional fee to extend until Mar 1, 2023 if needed. After 10 years, margin is 2.75% (I am assuming this means you take the SOFR and add 2.75%).

    My home completion date is Jan 31, 2023

    Home details:
    New construction, already framed and plumbed, Midwest
    Purchase price: $871,000
    Anticipated price after change orders: $900,000
    Down payment: 10-15%
    Mortgage: $800,000
    Income: $475,000

    I have several offers of 30 year fixed at 5.625%. The 10/1 ARM seems like a good offer. Please let me know what you think of this offer. The only hesitation is my home not being completed by Feb 15, 2023 and having to pay an additional 0.25% fee. However, that gives me two weeks of wiggle room.

  • #2
    Tough call. I’d probably take the fixed rate only because the average mortgage rate over the last 50 years is just below 8%. We’ve had historically low mortgage rates over the last 10-15 years so I think people had gotten used to that but it’s definitely not the norm.