Buying first home – 10/1 ARM on a low loan balance?

Hello everyone,

My offer has been accepted on a townhome. I'm currently looking through loan options and want to ensure that this idea of mine doesn't have a major flaw or hole that I'm not seeing.

Purchase price: $107,500

Seller Concessions: $1,000

I am looking at a 10/1 ARM to cover closing costs with a decent rate on the first mortgage and a moderate rate on the second. The second mortgage will be something like $10,000 and easily payable within one to two years – the interest paid on this will be $1,000 to $1,500 depending on the speed with which I pay it off.

This will leave me with the first mortgage at 4.375% with ~$95,000 with a fixed rate for ten years. I have the option to refinance this loan if shit hits the fan or life falls apart somehow between now and 2027. My plan is to have this paid off in 15 years from the time the loan is established.

Does this plan make sense? Is the inherent risk that I get lazy and don't pay the principal down fast enough and the lender hopes I never refinance?

More real estate tips at Program Realty Wix site


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