5 Reasons Why a 5 Year ARM Made Sense

Last spring, my family and I made the commitment to purchase a home. Our new mortgage is a Adjustable Rate Mortgage that is scheduled to adjust in about five years. In my first post about this topic, many readers questioned the wisdom of getting a 5/1 ARM. The point that the readers made was solid: interest rates are at the lowest in years and likely the lowest that they will ever be, therefore, it follows that we should have locked in a 15 or 30 year rate. I understand the wisdom of that line of reasoning, yet we still chose to go with the 5/1 ARM.

Why we decided to buy instead of rent

Three years ago, we moved across the country and almost went under financially when it took 16 months for our old house to sell. I immediately promised that I would never buy a house again. . . . Until last month when we signed on the dotted line for a home once again. Here is what changed my mind:

No more moving

Obviously we cannot tell the future for certain, but my wife and I plan to never move away from our current location. Even if my job situation changes, we are committed to staying in the Denver area. We really enjoy the weather, the culture, the mountains and above all, our church. A year ago, we expected that we could move at any time.

We are moving . . . !

Sometimes you have to eat crow.

For the last three years, I promised myself and anyone else who would listen that our family would never buy a house again. This stance was mainly due to all of the trouble that we had selling our house after moving to Colorado. Well, it turns out that during our search to find a more affordable rental property, we stumbled upon a home that we intended to rent, until we crunched the numbers and realized that it was actually cheaper to buy. Okay, we are not buying exactly, but in the United States, renting-to-own from the bank is commonly called “buying” a house. We are just changing landlords, I guess, but hoping to build a little equity in the process.

3 types of rental scams on craigslist

I like Craigslist and both Mrs. Stew and I buy and sell frequently on the sight. Sometimes we do well . . . other times not so well, but I still heartily recommend this mostly free website. It is the modern-day equivalent of the yard sale, except Craiglist probably brings more eyes than telephone pole signs and balloons tied to the mailbox.

Over the past few months, we have been looking for a new place to rent. There are so many websites to choose from when looking for a home to buy or rent that it is impossible to keep up with all of them, so we focused on Craigslist. We were quickly exposed to the usual Craigslist scams and quickly learned to spot them. Here are three types of rental property scams that we observed:

Decision on the rental unit

A couple of weeks ago, I wrote about how we were trying to decide whether or not to move into a different duplex in order to save $200 a month in rent.

We agonized over the decision for a long time. The new place came with a much smaller yard, no garage, but new carpeting, new appliances and of course, lower rent. Mrs. Stew and I are serious about cutting expenses and we were ready to make the hard choices needed to adjust our lifestyle to the new place. We were going to need to throw out or sell a lot of our stuff – including things that we might have otherwise wished to keep. Items like extra kid’s bicycles, a chest freezer, an extra bed for guests and more.

Second mortgage paid off today!

And so, our housing saga comes to an end today – at least I hope.

In March of 2008, I took a job several states away and my family and I packed up and moved. We immediately put our house on the market, but it took almost eighteen months for it to sell. I have recounted most of the story here at Gather Little by Little:

What should I do with my house?

More thoughts on short sale, foreclosure and bankruptcy

My house: a cautious reason to hope

Housing update: short sale, foreclosure, etc.

How much is moving worth?

I have mentioned once or twice that we would like to find a place to rent that comes with lower rent than our current location.

Late last week, Mrs. Stew found a rental that had just come open on Craigslist and called to find out more details. A few days later, we drove over to see the place. It was not terrible, some things we liked, some things we did not like. Let me lay out the pros and cons to see what you think:

I might never buy a house again

Last week, Mrs. Stew started a sentence with the words, “next time we buy a house . . . ” and then finished the sentence with her idea for our home at some point in the future. I responded that I did not think we were going to buy a house anytime soon, if ever. Of course, Mrs. Stew has heard the statement from me on many occasions over the past two years. I think she had been mostly dreaming out loud while making her buy-a-house plans.

Oh, the weather outside is frightful

cold house

. . . or soon will be.

We used to live in one of the coldest areas of the country. Our heating bills for a 1,200 square foot house ranged from $225 and $275 a month during the winter. We now live in a state with a more mild winter and our heating bill never really goes over $100 in a month. Needless to say, in our former home, we did everything possible to hold costs down and even though our current heating expenses are not as great, we still take measures to reduce heat loss.

Common new home buyer mistakes


I was talking with a co-worker recently who was preparing to purchase his first home. He recently got married, and has been renting for a few years. He felt that he had a good down payment and with the economic stimulus benefits for new home buyers, now was the time. I couldn’t disagree with him, for him it was time.

Now is a great time to buy a house, but there are some very common new home mistakes that I shared with him and will share with you as well:

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