5.625% on 7/6 ARM. Good deal?

Building a house with a physician loan through Huntington (builders preferred lender). Builder giving 15k to buy down the rate or closing cost. Can you guys take a look at the loan estimate and let me know your thoughts? Thanks in advance.

Sale price: $606,645
Loan amount: $576,313
Interest Rate: 5.625%
Monthly Principal & Interest: $3,317.58
Estimated Taxes, Insurance & Assessments (Property tax, home owners insurance, HO dues): $946/mo

Closing Cost Details
Loan Costs
A. Origination Charges: $19,305
3.125% of Loan Amount (Points): $18,010
PROCESSING FEE: $695
UNDERWRITING FEE: $600

B. Services You Cannot Shop For: $896
Appraisal Fee: $525
APPRAISAL RE-INSPECTION FEE: $150
APPRAISER MANAGEMENT SERVICE FEE: $15
CREDIT REPORT FEE: $59
DATA VERIFICATION FEE: $15
FLOOD CERT FEE: $8
INSURANCE SERVICE FEE: $30
MERS ASSIGNMENT FEE: $25
TAX SERVICE FEE: $69

C. Services You Can Shop For: $3400
TITLE-ALTA 25-06 Deletion of survey: $50
TITLE-ALTA 6 VARIABLE RATE MORTGAGE LENDERS TITLE: $50
TITLE-ALTA 8.1 ENVIRONMENTAL PROTECTION ENDORSEMEN: $75
TITLE CLOSING FEE: $650
TITLE CLOSING PROTECTION LETTER FEE: $60
TITLE COURIER FEE: $100
TITLE EXAMINATION FEE: $295
TITLE INSURANCE BINDER: $100
Title lenders title insurance: $ 1723
Title Otirb Oh-112 Del Gen Exc for mech lien: $172
Title recording service fee: $100

D. Total loan costs (A+B+C): $23,601

E. Taxes and other government fees: $316

F. Prepaids: $1,500
Homeowner’s Insurance Premium (12 months)

G. Initial Escrow Payment at Closing: $4,975
Homeowner’s Insurance: $125.00 per month for 2 mo. = $250
Mortgage Insurance - 0
Property Taxes $787.50 per month for 6 mo = $4,725

H. Other: $1,209

One time set up fee: $175
Survey fee (optional): $175
Title - title owners insurance (optional): $859

I. TOTAL OTHER COSTS (E + F + G + H): $8000

J. TOTAL CLOSING COSTS: $31,301

Lender Credits
D+I = $31,601
Lender Credits: -$300

Calculating Cash to Close
Total Closing Costs (1): $31,301
Closing Costs Financed (Paid from your Loan Amount): 0$
Down Payment/Funds from Borrower: $30,332
Deposit: -$30,822
Funds for Borrower: 0
Seller Credits: -$15,340
Adjustments and Other Credits: 0
Estimated cash to close: $15,471

Index + Margin = 30-day Average SOFR + 3%
Initial Interest Rate : 5.625%
Minimum/Maximum Interest Rate 3% / 10.625%

You’re paying 18k to buy down the rate. How long do you anticipate keeping this house?

Sawyer said:
You’re paying 18k to buy down the rate. How long do you anticipate keeping this house?

At least 20 years. Builder giving me 15k to buy down the rate for using their preferred lender.

@Oli
I would keep some of that point cost unless your DTI is questionable.

You can refinance at a lower rate for a lower cost between 6-36 months after closing.

Those origination charges are absurd. Arms are bad, mmkay?

If you want to stay for 20 you shouldn’t get an ARM