Someone want to give me a quick lesson on the difference between a JUMBO and a ARM mortgage??

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5 Responses to “Someone want to give me a quick lesson on the difference between a JUMBO and a ARM mortgage??”

1. Bestbank Real Estate on: 18 June 2009 at 7:54 pm

   A jumbo compared to an ARM is like comparing a GMC to a Chevy. A Chevy is always a GM but a GM don't have to be a Chevy.

   A jumbo is a mortgage usually higher than 400k but can change with different lenders. It can be an ARM or a Fixed rate.

   An ARM is an adjustable rate mortgage.

   Be careful 2/28 and 3/27 are also called fixed rate mortgages because they have a fixed rate for 2 or 3 years depending on which one you get. Their rate than becomes adjustable after the fixed rate and always goes up. There are also balloon notes out there too. They may be fixed on a 30 year amortization but the balance will become due in full at a set year. An example would look like this 30/15 which means it is a 30 year fixed rate that balloons in 15 years.

   Your best bet is a FIXED rate for 30 or 15 year. If you are getting a conforming loan (FHA, VA or Conventional conforming) than all the rates will be honestly close with different lenders. If you have to go Non-Conforming than an ARM will be the cheapest, 2/28 will be next and so on until you get to the fixed. If you want to calculate your odds figure this. On an Arm your rate will increase at 6 months by 1.5% up to 3% at 12 months and 3% the next year with a maximum of usually 7%. The 2/28 and the 3/27 will do the same after 2 years and 3 years. Add 7% to the start rate and that is what you will most likely be paying in a couple years with an ARM. Now look at the FIXED rate. What you see is what you get! Don't let a mortgage broker sell you anything else but a fixed rate. If they do you will see them again in a couple years and give them a few grand to refinance you over and over and over.

   Clear enough?

   SLIM EMAIL ME DIRECTLY MY ANSWER TO YOUR EMAIL BOUNCED. CANLENDYOU@YAHOO.COM

   Excellent Luck,

   Michael
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