I purchased a house in '03. I put down 20% in cash and got a 5 year ARM at 4%. I got the 5 year ARM because I knew I would be moving within a year of the ARM ballooning, and that is still the case (the ARM starts ballooning in September 08, and I will be moving by spring 09).
I can only speculate what the market will be like at that time, but I assume it will be fine. I am lucky that I own a starter home that has some of the best curb appeal in the neighborhood- I wouldn't have any trouble at all selling it and making a good profit.
My question is about whether I should or not. I've always assumed I would have to, mostly as I would need the down payment for the next house to avoid PMI. I've had several people tell me I should look into using the equity for the current house as a down payment for the next, so that I can hang on to this one and rent it. Perhaps it's my lack of experience with the subject, but that seems a little risky to me.
I ask as I need to decide before the ARM expires if I want to switch to a fixed rate loan. Thoughts? I will obviously be reading up on this in addition to posing the question, just wanted some opinions.
I can only speculate what the market will be like at that time, but I assume it will be fine. I am lucky that I own a starter home that has some of the best curb appeal in the neighborhood- I wouldn't have any trouble at all selling it and making a good profit.
My question is about whether I should or not. I've always assumed I would have to, mostly as I would need the down payment for the next house to avoid PMI. I've had several people tell me I should look into using the equity for the current house as a down payment for the next, so that I can hang on to this one and rent it. Perhaps it's my lack of experience with the subject, but that seems a little risky to me.
I ask as I need to decide before the ARM expires if I want to switch to a fixed rate loan. Thoughts? I will obviously be reading up on this in addition to posing the question, just wanted some opinions.
