FHA Loan 7 Year Fixed ARM in California is a post from: FHA,VA and Conventional Home Loans in all 50 States

There is an excellent FHA loan mortgage option that very few are aware of.  This is the 7 year fixed FHA ARM loan.   On this FHA loan product, the interest rate is fixed for the first 7 years.  The advantage of this FHA loan over the standard 30 year fixed FHA loan is that the interest rate can be much lower and thus the payments much lower.   For borrowers who think they may only stay in a house for 7-9 years, this can be a very good option.    The FHA borrower will save a substantial amount of interest over a 7 year period vs.  a 30 year fixed FHA home loan.

The way this FHA loan product works is the interest rate is fixed for the first 7 years.  On year 8 the loan will adjust based on the 1 year treasury bill index plus the margin (margin is usually between 2.25%-3%).   The maximum the rate can rise on year 8 (and every year after) is capped at 2%.  The maximum the rate could rise for the life of the loan is capped at 6%.

FHA lenders also offer 1,3,5 and 10 year fixed ARM’s.  The 7 year fixed ARM is a particularly a nice balance because if offers a substantially better rate than the 30 year fixed FHA loan, but offers the safety of 7 years fixed rate vs. the 1,3, and 5 year fixed FHA ARMs that offer less years of a fixed rate.  And the 10 year fixed FHA ARM is not enough of an interest rate improvement over the 30 year fixed to make it worthwhile.

So I hope this gives you some options to think about if you are pretty sure you will only be in a home 7 years or less.  If you think you will keep a home for more than 8 years, I would still highly recommend the 30 year fixed FHA loan.  If you would like to get approved for a FHA loan don’t hesitate to call us at 858-922-7899 or email us at homeloan8@gmail.com.

Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA, VA, conventional, Homepath specialist)

858-922-7899

homeloan8@gmail.com

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