30 Year Loan Might Not Be for You

Adjustable-Rate Mortgage

Adjustable-Rate Mortgage’s get a bad rap. But with Modern Lending’s ARMs, you might want to think twice about a 30-year mortgage!

Jesse: If you're planning on building your dream home here in Idaho, this is a product that you have to know about. So for any of those people moving here, or currently here, if you're envisioning building your dream home in the next several years here in Idaho, there's a loan product that might fit you perfectly and you probably don't know about it.

Bryce: It's probably right guys. So, an ARM is what we're talking about. So ARM is an adjustable-rate mortgage. Now off the bat instantly, a lot of people start to back out because it's an adjustable-rate mortgage, it's not a typical 30 year fixed conventional. However, we modern lending have some very unique products like a jumbo ARM or a normal ARM that is perfect for the right buyer and that right buyers, you know somebody that's either here currently living in Idaho, or maybe an out of state buyer that's coming in and wanting to build their dream home, but they're only going to be in the house for five to 10 years. It doesn't make as much sense financially to lock into a 30-year note when you know that you're only going to have the home for maybe 5 or 7 or 10 years and so what we look at are a five or seven or ten year ARM and adjustable-rate mortgage and what the first number you guys need to be the most aware of is that first number in the front. So, sometimes you see like a five, one ARM, a five-six ARM, five-seven ARM, the first number that five is meaning it's going to be a fixed-rate mortgage for the first five years and then after that, that second number is going to tell you how many times it can adjust within the overall term and so guys, I know a lot of us are like you know, those are scarce because they're adjustable whatnot, they're not especially when you have a plan in place. You talk to a professional like myself to talk about how long you're going to be in the actual house and the plus side is rates are already so low. These jumbo ARMs are lower than the 30-year conventional fix right now. So again, it makes a lot of financial sense that even consider it if you know it's not going to be yours forever home.

Jesse: Exactly! So reach out, talk to Bryce and make sure you have all the options and played are really making a wise financial decision. Most people don't stay in their homes for more than 10 years, the average is five to seven years, stay in your home. So if that's your plan, and you already know you're going to be in there five or less years, getting a lower interest rate up front, and that's still locked in 5, 7, 10 years could be the best option.

Bryce: Jessie and myself have over $2 million in debt. But this is why we sleep like a baby at night. So that's right guys, me and Jesse have well over $2 million in debt. But there's a reason why we're so calm about it. Jesse goes and tell them.

Jesse: Exactly! So you hear debt automatically. It's a concern. There's good debt and there's bad debt and what we're talking about is $2 million dollars in mortgage debt for mostly, really all investment properties. So, type of investment vehicle and at extremely low-interest rates so that would fall into the good debt category, which we'll talk about a little bit more the bad debt category is a liability. So you're talking about anything that does not provide you revenue or appreciate in, you know, on annual basis, exactly higher than the potential inflation rate. So, vehicles, you know, jewelry, you know, any sort of personal items would be in the bad debt, credit card debt at the top of that list. Yep. So, what we're talking about is over $2 million in good debt, which is us leveraging financing to purchase real estate that provides us positive net profit every month, as well as capturing appreciation that is greater than the interest rate and greater than the current inflation rate and that's how we can sleep well at night knowing we have $2 million that we have to pay off eventually, 

Bryce: But someone else is paying them right now. 

Jesse: Exactly! But it's not a concern.

Bryce: Exactly and I think that the other thing that we'd like to share with you guys is, you know, not every single time that we put 20% down on any of this, there was creative financing involved, there was house hacking involved, you know, there were multiple, multiple things that we did besides having to save up 20% of our own money, keep it in the bank, and then put it down. There are so many creative ways to be involved in real estate at a very young age, you don't have to always think about I got to save, I got to say, I got to save and that was, you know, a lot of our, maybe our parents and grandparents kind of thinking process, you got to save up your money, you'll be okay, well, we can't right now, we simply can't just because of how fast the assets and how fast inflation is occurring right now. It's easier to be creative and that's why we got you to know, we come out with these videos, we talk about this stuff because we want to inform you guys that there's a simpler way to get into an asset class like real estate.

Jesse: Exactly and we're gonna bring up in an entire video on how we believe you can beat inflation, which is a very important topic that you guys should all be researching and you know, well versed in, and again, we're going to discuss our ways of attacking and trying to beat it and the biggest one or one of our most, one of our favorite ones, is leveraging lead to purchase cash flowing real estate and that's exactly what we're doing with again, over $2 million in mortgage debt.

Bryce: Yeah, exactly. So, guys, you have any questions on just this video, shoot us a DM, send us a comment below, take a lookout for that inflation video, we kind of going over different asset classes and how to get involved.

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