The Rise of ARM Loans (Adjustable Rate Mortgages)

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[SoWeirdU]

So basically it`s 2008 part 2. There is a way to do adjustable rate loans under certain limitations. The problem that US banks are not restricted to normal plans. Be careful guys, these loans will bankrupt you.

[eyeinsee]

ARMs can be ok just as long as theres a cap on how high your payment can adjust when the time comes.

[HoustonMortgageLender]

Great video Javier! Folks still stay away from arm loans as everyone believes that they are "the devil". Rates are still low, but as they go up to 6% and maybe 7% later this year, it might be an option. So far only a few clients asked about them. If anyone is interested in these, please make sure you work with a reputable lender. I agree with everything you said brother!

[GarciaCapital]

Big Gut Energy™️ is telling me this won’t end well

[Theman]

I think people getting arm loans means they are being desperate to get a home. Desperation is never a good thing. It could make the market crash in the future and foreclosures would be on the rise. Just my opinion.

[shouse]

just another way to attempt to keep housing elevated....keep the FOMO going!!!! pay over asking!!! buy buy buy!!!! lol

[richleaves]

I bought my first home in 2002, a brand new Dominion home in one of the dozen communities they were building at the time. No money down and some kind of voodoo ARM mortgage. The qualification for the loan was based on the first years payment, which was the lowest rate. I remember the second year the rate jumped and so did my payment, I refinanced and all was fine. Around 2006 -10 our brand new community was half full of foreclosures. Thanks to ARM's all these people thought they could afford a home they couldn't really afford.

[YourOwnWay]

Getting an ARM loan now is like taking off your seat belt right before you crash. Just get a conventional loan and then refinance when (if) the rates drop.

[jpmcoy]

ARMs are actually good if you plan on purchasing a home well below what you’re qualified for and plan to pay extra on the mortgage. LIKE A LOT EXTRA.

You use the teaser rate to hammer down on the principal, and by the time it readjusts in year 5 or 7, the new rate will be based on a much lower principal that your payment might actually go down.

If you can project and plan being able to pay off the home within 7-10 years ARMs are amazing. If not, better get a fixed rate for 15-30 years

I used to write mortgages, and I always offered ARMs to people who have the desire and income to get the loans paid off within 7-10 years. Not for everyone, but a great option for some

[stacygoldstein]

We bought our home in 2000 with a traditional loan. Refinanced into an ARM and then refinanced the heck out of it. Just hearing ARM and remembering 2008 along with it's lasting effects is enough to make me shudder.

[ricardoh]

2008 called, they want their ARM's back

[giz]

I got a 6.1575 arm loan because I was self employed..to buy my 1st house...with a 10%down...a year later...refinanced to conventional 2.75
Totally worth it...but must keep finances in check.

[iPDot]

I have friend who swears by ARM. He purchased his last 3 homes with ARM. The benefit of ARM is getting lower rate BUT I think the caveat is….the home you’re purchasing is NOT your “forever home”. If you plan on staying in the home beyond your ARM…then that’s where you can get into trouble. If the idea is that it’s a short-term home then you have to be sure then put yourself in a financial position to make that move when the time comes, which is easier said then done. You can prepare for your future but you can’t predict it. A lot of people plan for purchasing a home but once that do, they ease of on the things they do to get themselves into a position to buy. You have to stay diligent with your finances. I’m considering ARM (5/6 or 7/6) for this reason. We purchasing a townhouse with the intention to upgrade to a house in a few years.

[thatssosteffi]

Javier thank you for bringing this to light! I asked you about a few video ago to cover this because a report came out about them being on the rise.

As far as your statement at 4:30…it’s easy to say that when you already have a home(s). Interest rates are high, home prices are still very high and some folks rents are doubling or not being renewed. Folks are desperate so getting into a home (even with predatory loans) feels like their best option.

Everyone can’t move to the middle of nowhere Mississippi or Kansas to find a home. I wish this wasn’t the alternative suggestion.

[NorthRealtyGroup]

Learn about ARMS before doing a video and how they work. Your way off on most of it

[jcstl]

I did something similar 5 years ago. My 30 yr fixed was at 4.25%. I refinanced with my credit union to a 5-5-5 deal where my first 5 yrs my interest would be 2.9% next 5 yrs would be capped at 2.9 so it could only go up by 2% every 5 yrs. So my 5 yrs came up not too long ago my interest rate for the next 5 yrs is only 3.15 but I only owe 10k so it worked out for me. You just have to do the math for your situation and look at worst case scenario if you can afford it. Good luck

[richdelgado]

There are only a couple of reasons to get an ARM loan:

1. You plan on paying down SO MUCH of the principal in the loan within just the next few years, the rate increase will be nothing since you're not paying down much.
2. You plan on staying in the home for just a few years, then sell it and move into your "forever" home. This is pretty risky, though, because you have NO idea what the home market will be when you decide to sell.

But if an ARM loan is the only way you can get financing...wait.

[jorgevasquez]

Just wanted to say that the current CEO of Twitter looks like you😁

[shanv]

I don't think is will be a 2008 collapse because you still need to be income a verified for mortgage vs 2008 where everybody was getting loan by just saying they make an X amount money without verifying your income. Also, if you do get an ARM usually the borrower will sell within the teaser rate or refinance before the teaser rate expires. Just remember you don't need to refinance back to a 30 year fix. There are multiple shorter term fixed options that would have a lower rates. Typically 25, 20, 15 year fixed have lower fixed rates. For example, if you get a 10/1 ARM you should refinance to a 20 year fixed. Your loan life will still be 30 years and you would be saving on interest.

[paul]

Can you refinance an Arm loan before the fixed period is up?