When we bought our townhouse in 2005 we bought using an 7/1 ARM @ 4.25% for $460k. We figured we wouldn't be here in 2012, hahahaha...We're still here in 2014. BUT we've saved a ton in mortgage interest and we've still got an adjustable rate mortgage.
Back in 2011 we refinanced to a 5/1 ARM at 3.125% $416k. A year later in 2012 we refinanced to another 5/1 for 2.625% for $410k. Both times was no cost mortgage, so our rate was higher than if we had paid but it didn't cost us anything to get a cheaper rate.
Our current mortgage caps out in 2020 @ 7.625%. It starts increasing in 2017 @ 2% annually and caps out with a lifetime minimum of 5%. Who knows where rates will be but since we're paying down approximately $800/month or $10k/year we could easily handle the increased interest rate or we could refinance before then. Seriously we've saved a ton in mortgage interest and we've been paying down the mortgage faster because of it.
We have 33% equity in our house now based on purchase price, and with current appraisals/sales I know we're looking at a sale price of $725k-$750k and we owe around $390k so we have about 50% equity and we'll be paying off more the longer we stay put.
The joys/sorrows of living in such a HCOLA. It's an old, tiny townhouse. But it also could be the bedrock of our future plans.
Have you considered an ARM?
I have an adjustable rate mortgage...
May 22nd, 2014 at 12:06 am
May 22nd, 2014 at 12:18 am 1400717931
The interest rate drop over the time we had the loan was just plain luck. We don't live in a super high COL area but we don't live in a super low COL area either.
We bought in the mid-90's and paid off the 30 year mortgage in about 15 years.
May 22nd, 2014 at 12:19 am 1400717953
May 25th, 2014 at 06:36 pm 1401042963