Is it possible to get a 5/1 ARM loan for 6 months and and then refinance to a normal 30yr fixed Mortgage??
I want to get a 5/1 ARM interest only loan and keep it for 6 months to a year ( to help me save up more money) and then refinance it to a Normal 30 or 15 year fixed Mortgage. Is this possible? Also what do I have to do to qualify for the 5/1 ARM loan? Do you have to put down a huge down payment or something like that? I have a great credit score, but next to nothing for a down payment.
- DEACTIVATEDLv 41 decade agoBest Answer
Can you? Sure. The better question is - Should you?
Many loans of that type are coupled with a stiff prepayment penalty. Make sure you factor this into your cost analysis scenarios.
There are some loan products that will help you get past a short-term cashflow deficiency, but for the most part, that underwriter wants to see where the money will come from. You want to have 6 months reserve in the bank, a 20% down payment and a good stable job before you go buying in the current market.
If you are considering this move to make a first time home purchase, I would STRONGLY advise against it. That is, unless you would enjoy being one of the "Holy crap, I'm losingmy home because I can't afford my mortgage!!! HAAAALP!!" posts on Yahoo Answers.
- Anonymous1 decade ago
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Once you need to finance the buying of your own home with a mortgage, it's very important that you do your research properly and understand all of the variables. When it is essential that you get the absolute best mortgage refinancing-->enter into some research and groundwork on your own because the Internet can equip you with an absolute pot of gold of very helpful data when it is essential that you get the best mortgage refinancing.
- glennLv 71 decade ago
Where are you coming up with the down-payment in six months?
A year ago I bought my new home before I sold my old home. I got a "bridge" loan from the bank to cover me until I sold the previous home.
If I had never been able to sell my previous home then I would have been in trouble, but the bank said I could have kept it for up to two years.
One huge advantage was that the up front fees for a bridge loan are extremely small.
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- LandlordLv 71 decade ago
This is a terrible plan. It will cost you a fortune and you are assuming that the house value will not decline at all in 6 months.
If it declines you will not be able to refinance.
- npkLv 71 decade ago
Doesn't make sense. I would delay any purchase for those six months and save for a down payment.
- Anonymous1 decade ago
good answer danno-also you must calculate all fees including underwriting and closing-you may be best off to wait, fees alone may make this a loosing prop-run the numbers.