The average time in a home is something like 7 years. If you are
young, single, and/or not secure in your marriage or job, then it is
less. If you are older, happily married and have a stable job, then it
is more.

One idea. Get the variable rate, like a 7 year ARM. Then pay it off at
the 30 year payment rate. Rates would have to go WAY up for you to
loose on this one.

When we buy a house we think it is forever, but most of us move every
few years, or refinance, or something. Very few 30 year mortgages go
the full term.

The last 10 years or so, rates have been declining, and we have all
been refinancing. I have refinanced my house 3 times in the last 8
years. I went with 7 year ARM and now I have a 4% second.

I agree rates are likely to go back up, but when and how much, no one
knows.

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Actually, that was my original plan. Even though I had enough funds to do 2
seperate closings, I thought that if I wanted to buy my house outright, I would
get an adjustable 6 month ARM home equity loan in my present house, use that
equity to buy my new house and then when I sold my old house, just payoff the
equity loan.
After doing some careful researching though and with great advice from this
newsgroup, I thought at these low mortgage rates it did not make sense to buy
the house outright. Also you still have to pay seperate closing costs for the
home equity loan, which in my case was going to cost me between $2500 & $3000.

Hadn't thought of that one, Sandra. I agree that's an excellent reason for
a 1-year ARM.


"Sandra Loosemore" <sandra[at]frogsonice.com> wrote in message
news:m37jwyo2gi.fsf[at]dartfrog.localdomain...
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"Jack Rogers" <JackRogers[at]NOSPAMCinci.rr.com> writes:

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Well, I've thought of one: if you expect to have enough money to pay off
the mortgage entirely within the year. (For instance, if you are selling
another house in which you have substantial equity, but need to get into
your new house before the deal on the old one closes.)

-Sandra

I agree if you KNOW that you will be moving in 3, 5, or 7 years, then an ARM
makes great sense. In fact, even if you are pretty sure you'll be moving,
then an ARM is the intelligent way to go. However, for people who don't
expect to move (stable job, stable family situation, stable income), then I
would go with the 30-year fixed. And I can't think of ANY justification to
go with a 1-year ARM unless you're paying an outrageous interest rate AND
expect to move in 12-24 months.

Using prime rate over the last 10 years, a 1.5% move isn't that uncommon.
In 1994, for example, prime went from 6.0% to 8.5% in that year alone. An
ARM, without proper caps that most people don't seem to be concerned with,
would be awfully painful that year. Also, in the 124 months since January,
1994, prime was at least 1.5% higher than today for 95 of those months. It
was at least 2.5% higher than today for 92 of those months. It just doesn't
seem likely that an ARM will make much financial sense if you are in the
house a couple years after the term of the ARM ends.

All that being said, I have a 7-year ARM because I expect to move in about
five years. I was going to go with the 5-year ARM but thought the slightly
higher interest rate offered enough insurance in case I am here 6 or 7
years.



"TTRoberts" <ttroberts[at]aol.com> wrote in message
news:20040331100546.17857.00000414[at]mb-m21.aol.com...
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