Question:

Is a 3 year adjustable rate mortgage (3 year ARM) good choice for California?

Answer:

Well, California is a state that has experienced unprecedented home appreciation for 6 years in a row. That means, if you can get a home with a 3 year adjustable rate mortgage (3 year ARM), you'll carry very low initial rates for 3 years which spares your cash and gives your home enough time to appreciate well over its current market value should home appreciation continues.

When the 3 year ARM comes out of its fixed term, you should get new home appreciation and your equity will be increased. You should be able to refinance if it is financial wise at the time and if you do not have binding clauses on the contract; or you could sell and net the profit avoiding large mortgage installments meanwhile.

Also, since you need a good credit to ever take a 3/1 ARM, you must be good at managing your own finances and are unlikely candidate to default or become at a loss when the fixed 3 year term expires.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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