Picked a variable rate over fixed after crunching the numbers for my Seattle condo

Last month I was stuck between a 30 year fixed at 6.8% and a 5/1 ARM starting at 5.2% for a $420,000 condo in Ballard. The fixed felt safe but the payment was $350 more a month which would have squeezed my budget tight. I looked at how long people actually stay in their first place around here and the average is like 4 to 6 years before they move or refinance. So I went with the ARM figuring I can handle that rate for half a decade and by then rates should be lower or I'll sell. So far the first payment went through fine and I'm already putting the $350 I saved into extra principal payments. Has anyone else here chosen an ARM lately and regretted it or are you glad you did?

2 comments

2 Comments

theawest7d ago

Read some article recently that said a lot of people who picked ARMs actually ended up better off because they moved before the rate changed... seems like a logical move for Seattle honestly since nobody stays put for 30 years anymore. Plus you're already putting that extra cash toward the principal which is smarter than just having a bigger payment every month. I've heard horror stories from the 2008 days but those were different loans with crazy terms, not a simple 5/1 like what you got. As long as you keep an eye on things and plan to move or refinance in a few years I think you made the right call.

jesse846d ago

Man I used to be all about fixed rates no matter what. But seeing you break it down like that with the actual numbers and how long people stay in Seattle condos... kinda changes my mind. Makes sense honestly.