Need some financial advice - would it be crazy to take out a three year arm? Any financial experts?

[debbierlus]

Situation: Home renovation loan for 6.5 % locked for three years.

Could refinance at the end. Do you think rates will be nuts then? Not worth the chance. Pay another .5 point for a fixed?

If you are a financial person, please chime in.

[flvegan]

1. Any prepayment penalty on either loan?

I'd take half a point for the guarantee.

[NMDemDist2]

2. yup me too

[debbierlus]

3. You know what kills me? The reason I don't qualify is because I haven't been using enough credit

Sorry. But, you paid off your car early & pay off your monthly balance each month. We don't see enough credit!

WTF?

[NMDemDist2]

4. translation:

you are too responsible we can't make any fees and interest money on you.

good for you though!

edit to add, maybe a visit to a local credit union would be in order. they would love a customer like you!

[tigereye]

5. why would you want an ARM when you have a locked rate?

I assume you think things might go lower. I dunno. Despite the Fed lowering interest rates, ARMS seem pretty risky and volatile to me, given the collapse of the subprime mortage market and the resultant paranoia in the loan industry.

I'm no banker, but I'd be cautious.


And if you live in California, you can just ignore my Easterner's view of the loan industry. :hi: