Bay Area mortgage rates for 5 Year ARM sinks below 4%
The Mortgage Rates for a 5 Year adjustable rate mortgage (ARM) sank to 4% (and lower in some cases)* yesterday for Bay Area homes. Freddie Mac average rates released on yesterday reported 5 Year ARM at 4.27% at 0.6 points. But the rate improvements later in the day has opened up great opportunities for home owners and First Time Home Buyers. This could be great news if:
- You already own a home but plan to move out by 2016.
- You are a First-Time Home buyer and would like to move up in next 5-6 years.
- You plan to pay off or substantially pay down your mortgage in the next 5 years.
Assumption for the chart: 30 Year Fixed rate at 5.25% and the 5 Year ARM at 4%.
On a 5 Year ARM loan, the rate remains fixed for first 5 years and may adjust after that to a higher rate. In the chart above you could save more than $16,000 in next 5 years on a $417,000 balance even after accounting for a small closing cost to refinance. On a $700,000 balance that number is a whopping $28,000 and for $300,000 it is $12,000. There are no cost refinances available as well.
Don’t get me wrong. 30 Year Fixed rate is still a great option if you want a stable rate mortgage and plan to live in the house for a longer term. And the 30 year fixed rate continues to be at a historically lowest levels in low 5s.
Call me at 408.905.6261 or email me at firstname.lastname@example.org if you would like a free evaluation of your mortgage to see if an ARM loan is right for you. Since I am a mortgage broker approved with more than 100 lenders, I can shop for the best rates for you.
* The rates are subjected to change any time without notice. Credit, Income, Equity and other eligibility required to qualify.
Related Post – Rates set to go up after March 2010