Re: Who is applying for ARMS, and why? - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on July 01, 2002 at 22:15:25:
I thought I was the only one when I saw folks still using ARMS. I kept trying to picture in my head who would get a benefit from an ARM. 2 to 3 years ago it was right to get people into an ARM as the risk was good to the benefit of the ARM. The chance was good that a refi could happen with the first few years to go fixed. Well, rates are lower now and people have refi’d into fixed; so who needs an ARM now-a-days? The 90’s are over.
Yes, those people looking to get into a more expensive house today can qualify for more house with an ARM, but is it wise to go that direction when the rates are this low? Is the risk of rising rates in the next few years really worth it? I don’t know if rates will go up by much in the next 2 years, but I have to wonder if the Dot Bombs, Enron, WorldCom, Xerox, Boeing Layoffs, etc… will cause a blip in the economy such that an increase would be coming. BTW, did anyone catch WorldCom dropping from 83 cents in the morning to a final close at the end of day of 6 cents?
For any of you mortgage reps who might be visiting here, can you tell me who can benefit from an ARM when rates are @ 6.5% fixed? Is it really just for those folks looking to get more house for their buck right now and the risk of rates increasing worth it?
It has been a couple of years since I had recommended a client to use an ARM, as it is a mortgage reps job to help find the right financing, but at the time my rep was telling me it was a good idea to go that route.