Well I am looking at purchasing a home currently I am renting which covers all utilities in the rent however they are getting ready to make big changes in the contract which don’t favor the renters so I’m pullin out. I was looking at purchasing a home and pretty much have it narrowed down to the one we are interested in.
My question is I don’t think I’ll be here longer then 5 years if even shorter maybe close to 2 or 3 and I heard of the 5/1 ARM mortgage which lowers the interest greatly for the first 5 years then can really adjust in the years to come annually. My question is these are good if I plan on leaving in 5 years or refiancing with a different loan?
Also I was looking at the options some energy services provide where they average the monthly utlities cost based on an annual utility rate and you have a set amount of payments each month regardless of energy use that month so you don’t get hammered in the winter and summer seasons. Anyone with experience in this?
If so do you find it benefical or do you wind up spending more on the average then you do when you get hit with the heavier months?
I think you’re on the right track with both an ARM and the flat rate plans for utilities. I have many years experience with both as a homeowner (I am not in a real estate, mortgage, or related business).
ARMs are fine if you plan to (and are able to) sell or refinance before they start adjusting upwards. Recommended in your situation.
I have two ARMs right now, and both will be refinanced to fixed-rate mortgages within 10 months. I had to go with ARMs originally to get past a downward bump in my credit scores (bankruptcy after divorce). I knew my credit would bounce back in time to refi before they adjusted. Of course you can get stuck if you’re unable to refinance or sell, but that’s true of any mortgage really.
I really like the "easy pay" or "averaging" approach to paying utilities, and have been doing it for literally decades. It makes household budgeting much easier. In my experience utilities do a really good job of keeping track of the numbers, and adjusting them as few times during the year as possible. Highly recommended.
One bonus tip for you: ask about "doing your own escrow" with your mortgage. It may not be offered, but if it is you may prefer it (but don’t pay extra for it). Unlike utilities, mortgage companies ALWAYS keep more of your money for escrow (property tax and homeowners insurance) than I feel they should.
Federal laws allow them to have a "cushion" in case you miss some payments. That cushion is a balance in the escrow account of hundreds or thousands of your dollars, just sitting there. My favorite approach: do my own escrowing by setting aside the appropriate amount every paycheck by EFT to a high interest on-line savings account (such as emigrantdirect.com). Then just transfer from that account to your checking account (online) prior to paying property taxes or the yearly homeowners insurance premium. Alternately, pay your insurance premium monthly through auto-pay.
Great questions! Best of luck!
Congratulations on consideration of home ownership. Even 5 years you will see many benefits.
I have multiple utilities where I average both on my home and rentals. its a great program.
I’m self employed (Real Estate) and my income has many highs and lows and the average is a great way for me to go.
Best to you.
References :
No one should even think about doing a mortgage over the internet. You could be releasing very sensitive information to an identity thief.
Only give that information to a trusted and insured bank, and IN PERSON.
Your plan is good, however keep in mind that you may not be able to refi in 5 years, so you are gambling.
As far as energy goes, yes, if you can average it out it is very helpful if you have a tight budget. Knowing what the bill will be makes planning much easier.
References :
I think you’re on the right track with both an ARM and the flat rate plans for utilities. I have many years experience with both as a homeowner (I am not in a real estate, mortgage, or related business).
ARMs are fine if you plan to (and are able to) sell or refinance before they start adjusting upwards. Recommended in your situation.
I have two ARMs right now, and both will be refinanced to fixed-rate mortgages within 10 months. I had to go with ARMs originally to get past a downward bump in my credit scores (bankruptcy after divorce). I knew my credit would bounce back in time to refi before they adjusted. Of course you can get stuck if you’re unable to refinance or sell, but that’s true of any mortgage really.
I really like the "easy pay" or "averaging" approach to paying utilities, and have been doing it for literally decades. It makes household budgeting much easier. In my experience utilities do a really good job of keeping track of the numbers, and adjusting them as few times during the year as possible. Highly recommended.
One bonus tip for you: ask about "doing your own escrow" with your mortgage. It may not be offered, but if it is you may prefer it (but don’t pay extra for it). Unlike utilities, mortgage companies ALWAYS keep more of your money for escrow (property tax and homeowners insurance) than I feel they should.
Federal laws allow them to have a "cushion" in case you miss some payments. That cushion is a balance in the escrow account of hundreds or thousands of your dollars, just sitting there. My favorite approach: do my own escrowing by setting aside the appropriate amount every paycheck by EFT to a high interest on-line savings account (such as emigrantdirect.com). Then just transfer from that account to your checking account (online) prior to paying property taxes or the yearly homeowners insurance premium. Alternately, pay your insurance premium monthly through auto-pay.
Great questions! Best of luck!
References :
20 years of home ownership and being very careful with my money