FHA is now offering ARMS again!
Yes indeed! You heard right! Buyers now have the option to use either the 3/1 ARM or the 5/1 ARM when purchasing a new home which enables them to qualify for more house since they will qualify at the 1st year note rate.
Today's rate (5/2/09) is:
3.75% with 1 Origination point for a 54 day lock. Caps 1/1/5 Margin 2.0
THe 5/1 ARM is slightly higher of course but it has Caps of 2/2/6 which clearly makes the 3 year arm a much more attractive choice. Since the 3/1 ARM has the 1% per year cap in 2 years the rate at worst would be 5.75%. THe cap for the life of the loan would be maxed out at 8.75% but if the circumstances of the buyer would fit this type of situation the ARM might be a great alternative for them.
VA is also offering a ARM but we must call into marketing for quotes on these.