I currently have a 30 yr fixed at 3.75%. I want to refinance my current 4-plex to purchase another building. The loan I'm being offered now is 3.875% Term:5yr fix due in 30. The rate cannot increase more than 6% percentage points above the initial interest rate over the term of the loan. On the first change date, the interest rate cannot increase more than 2% percentage points over the loan.
I'm not planning to sell either building in the short term. I don't have a property in mind to purchase, yet.
Should I give up my fixed rate for the ARM? How risky is this ARM scenario? I have to make a decision in the next couple weeks or I have to start the process over. Thanks!
Do not give up a fixed rate loan, rates are currently at historical lows. Mortgage rates closely follow the 10 year treasury note. When the T-note rate goes up, so do mortgage rates. Right now rates are at a an all time low. Here is a chart that shows the historical rate on a 10 year T-Note https://finance.yahoo.com/echarts?s=%5ETNX+Interac....
Even if you pay a higher rate right now it is worth it.