For Costa Mesa Homebuyers, a Call to ARMs?
An article in last Wednesday’s U.S. News headlined a thought-provoking question: is an ARM a Good Idea in 2023? Now that mortgage rates are significantly higher than they were even only a few months ago, a question that might then have been answered with an almost automatic ‘no!’ has new relevance. Buyers daunted by the prospect of budget-challenging monthly payments may be penciling in the difference, seeing an attractive answer—but then unsure of whether the risk-reward formulations make Costa Mesa ARMs a prudent choice.
The article discussed the tradeoffs which it summarized in brief:
- If there is a fixed period, how long does it last?
- How often does the rate adjust?
- What is the limit to how much the rate (and monthly payment) can change?
- But the bottom line—and its unknowable element—is described by the first point: “You need to consider where rates may be at the end of your fixed-rate period.” Since “no one can predict long-term interest rate trends” the degree of risk can’t be calculated “with complete accuracy.” That is an understatement, of course—future interest rates can’t be counted on with any accuracy at all—especially five or 10 years hence—which may be when an attractive original rate begins to be adjusted.
A worthwhile exception is worth considering for individuals who don’t plan on being in the home long—that would make the adjustable element inconsequential. That is also true of the interest-only alternative when the I-O period ends and higher interest-plus-principal payments begin (with the negative characteristic that equity gains are limited to the property’s value appreciation). Another factor that might make Costa Mesa ARMs worth serious consideration would be when the buyer expects a substantial boost in their income before the adjustment kicks in.
Before serious house-hunting begins, it’s a timesaving idea to work out as many of the budgetary possibilities as possible. Choosing two or three lenders with whom to discuss today’s possibilities is a good second step – calling us, a terrific first!
We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976. It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at info@thel3.com
