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UrbanTurf Reader Asks: Is the 5/1 Adjustable Rate Mortgage Worth It?

  • October 12th 2011

by UrbanTurf Staff

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UrbanTurf Reader Asks: Is the 5/1 Adjustable Rate Mortgage Worth It?: Figure 1

In this installment of UrbanTurf Reader Asks, a reader wonders if a 5/1 adjustable rate mortgage makes more sense than a long-term conventional loan if he plans on sellling in 5 to 7 years.

I'm 32 and considering buying my first home. I've been told I should consider a 5/1 ARM (adjustable rate mortgage), since this will get me better rates than a conventional 30-year mortgage for the first five years. I know that the rate (currently around 3 percent) will go up noticeably in the sixth year to something that will be much higher than if I were to go the 30-year mortgage route, and it will continue to adjust higher for each year thereafter. But given my age, I'm almost certain I won't stay in the unit longer than 5 to 7 years.

Does the UrbanTurf audience think that the lower rate I'd get for the first five years of a 5/1 ARM is worth the risk that I don't move after five years and my rate goes higher than a conventional 30-year mortgage?

Post your neighborhood suggestions in the comments section. If you would like to submit a question for UrbanTurf Reader Asks, send an email to editor2011@urbanturf.com.

This article originally published at https://dc.urbanturf.com/articles/blog/urbanturf_reader_asks_is_the_5_1_adjustable_rate_mortgage_worth_it/4335.

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