They're back! The articles about the "wonderful deals" you can get with an adjustable rate mortgage. In the latest installment, this young couple put, apparently, 8% down (first warning sign, though I'm told that for FHA loans, that's actually putting down a lot) in order to get an ARM that starts at 3.75%, is fixed for five years, and after that can go up every year to a max of 8.75%. The couple figures that the savings in the first years will make up for the possible increases in later years. Maybe. But it sure sounds an awful lot like what people were doing before.
The Senichs, however, got an initial interest rate on their FHA-insured ARM of just 3.875% for the first five years. After that, it resets once a year and cannot go up by more than one percentage point annually. It has a five point lifetime cap, so the rate can never exceed 8.875%.Again, maybe. Though with a mortgage payment of $1800 a month, the grand total you owe, including all the extra bills (taxes, insurance, and let's not forget utilities on an actual house rather than a condo) have got to bring this to more than just "a couple of thousand."
The Senichs figured that their initial savings would keep them ahead of the game for at least 12 years. Their monthly mortgage payment will be little more than $1,800 a month, a couple of thousand with taxes, and mortgage and property insurance.
Anyway, we're back to the old articles about the "super deals" you can get with ARMs. And maybe these folks did get a deal. Maybe.
