Question about Adjustable Rate Mortgages?

My fiance and I are trying to by our first house. Because we are not married yet the house and loan will go in his name until we are married. He has owned his own business for the past two years and because of his shows 0 profit on his taxes. Because of his taxes and being a business owner he is only eligible for stated income home loans at this time. We found a house and had a loan, we even have a closing date but we just found out a few days ago that our loan "no longer exists" (which was a 30 yr fixed) the bank has informed us that the only thing they have for us at this time is a 3 or 5 year adjustable rate mortgage at 8.73% interest rate. This loan is our last hope or we lose the house and get our deposit back. My question is should we do this 3 or 5 yr ARM? I've heard horror stories about ARM's and I just need some advice. If we do this loan we can refinance in a few years and get a better rate for a 30 fixed like we want. I would appreciate any and all advice!! THANKS!!!

Update:

Well I am 5 years younger then my fiance and he's making between $150,000-$200,000 a year and I'm making about $30,000. His credit score is also in the 700's mine is in the mid 500's because I don't have as much history as him. The bank has told us the rate will either go up or down by 1% each year.

4 Answers

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  • Judy
    Lv 7
    1 decade ago
    Favorite Answer

    Do you have enough income that you could qualify in your name, and YOU could buy the house? And lots of people who aren't married do buy houses together. Talk to the lender.

    ARM's can be a real bad deal if the rate goes up a lot when they reset, and it can do that. You might be able to refinance in a few years, but unless the income picture changes, probably not.

  • Anonymous
    4 years ago

    I artwork for a tremendous loan lender-- always do a not effortless and quick cost. I actually have considered costs for a 2d as low as 7.00% hands (Adjustable cost Mortgages) can bounce as extreme as 10, 11, 12%......

  • 1 decade ago

    I would advise not to take the ARM. If the economy gets worse or your financial situation is not as good than you could be in a bind when it is time to refinance.

  • 1 decade ago

    If his business has 0 profit then it isn't making any money.And he isn't making any money. I suspect it is making money, he is collecting a profit, and avoiding taxes by claiming the business isn't making any money. Talking out of both sides of your face isn't going to work anymore.

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