It appears you have not yet Signed Up with our community. To Sign Up for free, please click here....

Anxiety Message Board

  • 3 year arm mortgage anxiety

  • Post New Thread   Closed Thread
    Thread Tools Search this Thread
    Old 08-02-2004, 12:23 PM   #1
    Join Date: Jul 2004
    Posts: 21
    sloski HB User
    Question 3 year arm mortgage anxiety

    I am having terrible anxiety about our mortgage. I can not stop thinking about it and the worse part is that I have no idea what it is. Can someone explain what a 3 year arm mortgage is? What happens at the end of the 3 years..Do you have to refinance? I am going crazy thinking of this. I have tried to get some awnsers from mortgage companies but they want to pull my credit and everything. Can someone please help?

    Sponsors Lightbulb
    Old 08-02-2004, 12:53 PM   #2
    Senior Veteran
    zekat's Avatar
    Join Date: Jan 2003
    Location: Missouri
    Posts: 894
    zekat HB User
    Re: 3 year arm mortgage anxiety

    My husband re-financed our house last year and did the 3-year arm thing. It saved us TONS each month and we have since paid all of our credit card bills off (we are debt free excluding the house and car payments). The idea of going to the three-year arm absolutely freaked me out and I still don't understand it. However, I have trusted my husband thus far financially and he has not let me down (don't get me wrong, we would not have done the 3-year arm had I sincerely not wanted to -- I just trust him in this regard).

    From what little I understand, it works something like this ---- you get an absolutely TERRIFIC intrest rate that is locked for the first three years (our house payment literrally went down by like $200.00 a month). After three-years, if the feds have upped the interest rate (and this is where I get confused), the interest rate on your mortgage will go up a small amount. However, there are caps each year (like ours cannot go up more than 2% in one year and it absolutely NEVER will go higher than 6% of what the arm rate was --- like if your 3 year arm is 3.2%, it will NEVER be higher than 9.2%) It's not like if suddenly the interst rate climbed to 18% that in the 4th year of your mortgage your interest rate will be at 18%.

    And no, you do not have to refinance at the end of the three years. I will tell you this ---- the reason my husband felt it was a good idea (and I do have to agree with him) is that we are planning on moving within the next three years. The only "glitch" will be if we are unsuccessful in selling our house. However, my husband has crunched the numbers and we can go well into the 6th year of our loan and still have saved money in the long haul! I think the bottom line is it can be smart if you feel strongly that you will not be where your at in the next couple of years and you feel like you can easily sell your house.

    I hope this helps

    Old 08-02-2004, 01:50 PM   #3
    Senior Veteran
    blue_eyed_girl's Avatar
    Join Date: Apr 2004
    Location: Oklahoma
    Posts: 1,478
    blue_eyed_girl HB User
    Re: 3 year arm mortgage anxiety

    Zekat explained it a lot how I think about it.

    You do get a lower interest rate. You don't have to refinance. My lender told me (could be different in states) that if you don't refinance, the rate can only go up ever 6 months and only like .5%, so your payment may go up $5. However, you need to check and see if your state has early payoff penalties or if they have regulations on a time limit you have to spend in your home before you can sell it. If you are not a first time buyer, these may not effect you.

    Old 08-05-2004, 08:12 AM   #4
    Junior Member
    Kevin72's Avatar
    Join Date: Feb 2004
    Location: MN
    Posts: 26
    Kevin72 HB User
    Re: 3 year arm mortgage anxiety

    I'm in the process of refinancing this way as well. I think it's a smart deal if you're moving within 3 years to do the ARM loan. If you choose to stay longer, just refinance again or I think they will lock you into a 15-year loan at a fixed rate if you go past 3 years.
    I'm actually doing an "interest-free" loan where I only pay interest and the rate is whatever is the current prime rate (4.25 I believe). It could be a bit risky, but since I'm moving within 3 years, we don't see the rate moving up more than maybe 1 point over that span--plus since I'm only paying the interest anyway, it could move 3 points and I'd still be fine. My payments were basically cut in half. But this is all specuation as I'm no expert, and it's up to Mr. Greenspan anyway.

    If you do a 3/1 arm, I think you can "lock in" to a set rate if you pay PMI (prime mortgage insurance)--but that can add another $75 per month (say the house is worth around $200k). Otherwise the payments will fluctuate with whatever the prime rate is. It hasn't been over 5 since 2001, but you can look up the history yourself.

    I'm not credit expert, but if you have a few mortgage companies pull your credit, it's no big deal. People realize that you may be shopping around for the best deal, and it's not like you're applying for more credit cards or something.

    Good Luck!

    Last edited by Kevin72; 08-05-2004 at 08:14 AM.

    Closed Thread

    Related Topics
    Thread Thread Starter Board Replies Last Post
    7 Year Old Suffers from anxiety DayByDay32 Anxiety 1 02-24-2009 03:56 PM
    refused Life Insurance for mortgage NutshellNutter Bipolar Disorder 3 10-26-2006 02:38 AM
    My Four-Year battle with Anxiety jvasel Anxiety 2 01-11-2006 10:01 AM
    What is wrong with a 30 year old single female? tillwemeetagain Relationship Health 69 12-22-2005 02:12 PM
    ontario disability and mortgage sweetpea333 Disabilities 1 06-18-2005 12:35 PM
    24 Year Old Male Needs Your Help! uofmchris Chronic Fatigue 11 05-21-2004 02:03 PM

    Thread Tools Search this Thread
    Search this Thread:

    Advanced Search

    Posting Rules
    You may not post new threads
    You may not post replies
    You may not post attachments
    You may not edit your posts

    BB code is On
    Smilies are On
    [IMG] code is Off
    HTML code is Off
    Trackbacks are Off
    Pingbacks are Off
    Refbacks are Off

    Sign Up Today!

    Ask our community of thousands of members your health questions, and learn from others experiences. Join the conversation!

    I want my free account

    All times are GMT -7. The time now is 05:00 AM.

    © 2022 MH Sub I, LLC dba Internet Brands. All rights reserved.
    Do not copy or redistribute in any form!