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Another 30 fixed vs. ARM question.. 10/5 with caps 3/3/6

Facts:

Fixed 30 years at 4.75% vs. 10/5 3/3/6 at 3.675% with a point By the 15th year you would have paid off more balance with the ARM than the fixed with just about the same total payment.

The way I look at it, I’m betting that one of the three happens in the next 15 years:

  1. Refinance to a 15 or 20 fixed. Mortgage rates calm down to a mid/high 3 with enough savings to cover refinancing closing cost.
  2. Investment made with the savings (monthly payment difference between ARM and 4.75%) returns enough to refinance and/or recast
  3. Refinance with another ARM to buy time
  4. Move out

At about 700k loan, the savings alone represent 45-50k at zero compounding int. You also would have paid off more of the loan.

Thoughts?

submitted by /u/eujenio8484
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/ubg9vw/another_30_fixed_vs_arm_question_105_with_caps_336/
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