Getting an ARM loan to purchase properties..

How difficult is it to finance a REI with an ARM loan? Is there a standard minimum term for an ARM? Making the minimum payment for six months would be a great deal if it can be applied to investment properties, it seems. Has anyone here done this and what sort of credit score, etc. are necessary?

arm loans range from 1,3,5,7,10, years with the intrest rate increacing with length of the arm. from your question though, i think your confusing an arm with an intrest-only loan. this is when your monthly payments are paying only the intrest and nothing on the principal. good for cash flow if you plan to sell within 10 yrs.

to get the best rates on loans of this nature you want to have atleast a fico score of 620+. not that it would be impossiable to get it done with a lower score, but keep in mind that in most cases 100% financing stops at fico of 580.

Greetings enricosuave,

If you’re referring to a “Pay Option” type of ARM, where you can pay less than the fully indexed rate, I think they can be good in certain situations. But keep in mind, the deferred portion of the interest just gets added back to the principal.

Typically these types of loans won’t go over 80% LTV, due to the negative amortization. However, there are a few lenders that will put a second behind them and allow you to go to 90% CLTV (even with stated income on NOO properties). They usually want to see FICOs around 680-700 minimum.

These loans can be a good way to enhance short term cash-flow. Or, in a market like yours, where you’re still seeing 20%-30% appreciation each year. Just make sure you have a good exit plan in place.

Hope this helps.

It is not difficult at all to obtain ARM financing for REI purchase transactions. In fact, it is preferred. Especially if you do not plan on keeping the home for very long. You can obtain lower rates on most ARM products, and on NOO investment purchases that may be the best way to go.

Most standard ARMs on NOO Invesment Purchases are 2yr and 3yr ARMS… Other “cash flow” ARMs with shorter terms may/will lead you into negative amortization and should be cautioned.

Consultant a professional mortgage broker.