My husband and I are looking in to buying our first home. We have researched and searched and found us a great home at a VERY resonable offer. In talking to the community sales person, she said that they offer something now a days where your first 3 years you are at a lower interest rate (it's not an ARM and does go up every year) and on the 3rd year locks you in at the fixed rate. It would be 3.3%, 4.3%, and final year at 5.3% (it helps buy up your principal or interest I believe). Has anyone done, heard, or seen this? I saw this on a "Our First Home" (or something like that) episode on TLC (a single mom did it to keep her home payments close to her rental payments). Just wanted to see if I could get some feedback on if this is true or another ARM in disguise.
"It's not to late to become who you've always wanted to be..."
I believe what you are
I believe what you are refering to is 2/1 buy down. Where you buy down the interest rate for two years and than in the third year it goes to a fixed rate for the remaining amount of the term. A lot of new home builders are offering to buy down the rate for the buyer, or giving incentives for the buyer to use towards buying it down (with the use of their preferred lender). Two things you need to consider. First, who is buying down the rate. You the borrower, or is the builder. A lot of the time it costs more to buy down the rate than you would save. Second, can you afford the payment when it goes up to the 5.3%.
If the builder is paying for it and you can afford the payment at 5.3% than it might be a good idea because it could potentially save you money.
Of course I would recomend that you speak to an outside lender(not just the builders) about any of this before you make your final decision.
First of all, even if the
First of all, even if the builders say it's too late you should ALWAYS get representation from a Realtor. Right now noone has your back. Do you have someone you can call? If not what part of the valley are you purchasing in?
Also, there are lots of options with mortgages, and yes, I agree - have a non biased party review it. If you need help find people, look at the Business Networking International website (www.bni.com) and find a chapter near you. Unlike most other networking groups, the members have to be approved and they are accountable in many ways, especially to the referrals they recieve.
Good luck!
Thanks for both the
Thanks for both the comments. The builder will handle the buy down and my monthly payment will (supposedly) remain the same or only go a slight percent higher ($100-200 more a month in three years which will be affordable). I talked to my mom a little about this as well since most likely I will ask her realtor to help out (good friend of my mom's and has sold countless homes). We are kind of up in arms about it right now as I've heard mixed feelings about the school and now with tolls coming into place for the freeways, I'll probably opt for something closer to my job.
"It's not to late to become who you've always wanted to be..."
I have never done this
I have never done this particular loan but have had a horrible experience in an ARM loan. My personal advice is stick with a 30 year fixed FHA loan, or an 80/20 conventional loan.
I will never do any other loan. Hope this helps.
Jennifer is a discussion leader for arizonamoms.com and mommy to four beautiful girls who range from 9 to 4 years of age.