Help with Mortgage

[n2k2928]

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I recently purchased a townhome for 160000 and plan on a 5/1 ARM with a 2.75% interest rate. The cap is set at 7.75. I will be in a 5 yr residency and will likely sell or rent after 5 years.

The townhome is fairly new and in a nice part of town.

I'm being told that due to the historically low interest rates I should've go with the 30 yr fixed. I know I'm taking a risk with the ARM. I sign my loan application on Monday...

 

[dpmd]

I recently purchased a townhome for 160000 and plan on a 5/1 ARM with a 2.75% interest rate. The cap is set at 7.75. I will be in a 5 yr residency and will likely sell or rent after 5 years.

The townhome is fairly new and in a nice part of town.

I'm being told that due to the historically low interest rates I should've go with the 30 yr fixed. I know I'm taking a risk with the ARM. I sign my loan application on Monday...

I got an ARM because it was lower than a fixed, but I plan to have my mortgage paid off before it gets adjusted up very much. Not sure what the comparison is between fixed and ARM right now, but you have to figure out what the chances are you will sell before it adjusts and how much the difference in interest rate would affect you if you decide to keep it (versus how the higher interest fate for a fixed would affect you if you end up selling in 5 yrs)

 

[DOCTOR LOAN PRO]

I recently purchased a townhome for 160000 and plan on a 5/1 ARM with a 2.75% interest rate. The cap is set at 7.75. I will be in a 5 yr residency and will likely sell or rent after 5 years.

The townhome is fairly new and in a nice part of town.

I'm being told that due to the historically low interest rates I should've go with the 30 yr fixed. I know I'm taking a risk with the ARM. I sign my loan application on Monday...

Hi,

The 30 year fixed would be a good option for many, but probably not you. Your specific situation as Resident is bit different than most being that your income will substantially increase after 5 years, and the chance of you being in this home are slim. I typically recommend our 7/1 ARM to my PGY-1 clients due to the very small difference in price. This would give you a 2 year "buffer" just in case you stick around a bit longer than anticipated, and or time to sell the home. If you wanted to be even more conservative, maybe a 10/1 ARM would be a good fit.

-Chris