Real estate question

[bigbadbuff]

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.

 

[TheHoff]

Being a landlord is a hassle and renters are generally a pain **********.

If the housing market hasn't collapsed where you are, it certainly is near the peak of prices (likely headed down) -- this is not the time where I'd want to get into a newer, larger property. Can you refinance into a fixed rate?

 

[spence]

If there's any chance you're going to keep the house I'd refi ASAP while the rates are still pretty good. Also this whole mortgage mess has really screwed up the system so even if you're an ideal borrower there are fewer attractive options on the table.

We had an arm that was set to detonate Jan 2008. Locked into a 15 year fixed at 5.875 (1 pt) just a month ago. I couldn't believe how little my payment went up!

-spence

 

[EL72]

I have done it and will continue to take equity out of properties to buy more because I've made the decision to be a landlord. That is the question you need to ask yourself. It can be a lot of work and hassle dealing with tenants, repairs... and the uncertainty and risk of having vacant units. If you're not confortable with this type of investment, just sell your house and put your excess savings into the stock market.

 

[EL72]

Originally Posted by spence

If there's any chance you're going to keep the house I'd refi ASAP while the rates are still pretty good. Also this whole mortgage mess has really screwed up the system so even if you're an ideal borrower there are fewer attractive options on the table.

We had an arm that was set to detonate Jan 2008. Locked into a 15 year fixed at 5.875 (1 pt) just a month ago. I couldn't believe how little my payment went up!

-spence

15 years!!! If you're happy with that security and payment, that's great but it's way too long a term for me. So much can happen in 5 years, let alone 15.

 

[Dakota rube]

ReFi immediately. Rates actually ticked down last week.

As to selling or keeping/renting: how far away are you moving? Being a landlord is one thing. Being a landlord several hundred miles away is something altogether different. Also make sure your (new) mortgage allows you to rent the house. Many have owner-occupied provisions.

 

[Piobaire]



Thanks and nice sharing information.
You make good plan and hire mortgage and easily repayment . This situation is very critcly . In 2008 depression many people who take mortgage and other loan sale there home because they are unable to repayment.

WTF on the four year necro and gibberish post for post #4?

 

[Biggskip]



WTF on the four year necro and gibberish post for post #4?

Looks like it was a future spammer.

 

[patrickBOOTH]

Yeah, but I wonder what happened to bigbadbuff's house.