5/1 ARM - Mortgage options

Guest 0.10 Dollars($)

Hello,

We build a home in 2005 with the understanding we'd be in the home approximately five years. We opted for the 5/1 ARM which we are able to pay each month, however I'm concerned about the current state of the market and the prospects of selling the home in the future. The plan to move in 2010 still stands, as my company will be moving to a new location, and they will assist with closing costs, moving costs when the time comes. If things continue along the current trend though, my current home may be worth $40,000 to $60,000 less than what we paid for it, and I won't be able to pay the difference at the time of sale and afford a new house. Wondering if there's any advice for a person in my situation. Trying to figure out if knocking down principal should be my best option or should I stick with the ARM. Looking for good options and appreciate any advice.

Regards,

JPB

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.77 Dollars($)

Hello JPB,

Are you asking if you can make extra payments towards the principal? You may do that but first of all you have to talk to your lender about this.

Could you tell me where you live? Is the market going down further?

There is another option which you may consider. You may put up the house on rent. This will help you to make the monthly mortgage payments regularly and you may sell the property at a suitable time when the market is a little better. You may also put up the rent with a lease-to-purchase option so that at the end of the lease term your tenant will buy the house from you.

evolovik26 · Posted: Tue Dec 11, 2007 7:08 am Post subject:

Well look at it this way, you have 3 years for the current market situation to rectify itself and most experts believe that it will by mid 2009. So in 2010 you will be catching the upswing of the curve if all things work as planned.
If things dont turn around then everyone will have it tough and alot of things may change.
So if you comfortable making payments now go ahead and do it and wait till you around 6-12 mon from the move to start worrying.

rick · Posted: Tue Dec 11, 2007 11:34 am Post subject:

I have written a 10 page White paper on exactly this topic, since I have been asked so often. If you'd like to receive it, I can e-mail it you you.

Thanks,

Rick

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