ARM vs fixed for mortgage with credit probs
Question: Condensed story:
We’ve been in a lease purchase for 2 years in November. At that time we’ll have $9200 in down payment and rent credit. Bankruptcy discharged 2 years ago in July. Trying to get this mortgage (finally) on a $102900 townhome by years end for tax purposes.
The guy I’m talking to quoted me, hold onto your hats, it isn’t pretty but it will be a mortgage, 11.25 for a 3 year ARM or 11.5 for a 30 year fixed.
I’ve run the mortgage calculator and the 11.5 is less than $50/month more. Are there any advantages given my credit history between the two? Since the bankruptcy credit has been excellent. Even got two car loans, unsecured credit card, etc, plus salary (self employed) is + 100k. Current lease is $1150/month. This would be saving us a couple hundred each month and the house would be our own.
Thanks for any advise…
Answer: Scott, I would not even consider taking a mortgage at that rate !!! 24 months out of bankrupcy with no bad credit since then is NO PROBLEM for an FHA loan… assuming all other qualifications are ok. FHA 30 yr fixed rates now are appx 7.5% with a few points…. no need for the ARM if you plan to be there a while. FHA guidlines may restrict the credits from the seller depending on the appraisers estimate of fair market value of the rent vs what you’re paying. Good Luck !!!
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