Arms: A Good Deal If We Move Soon?

Q: I'm considering buying a house and have heard that an adjustable-rate mortgage is a good deal if you'll be moving relatively soon. That could be my situation if I get a promotion - a good but not guaranteed possibility. Given that, what kind of mortgage should I try to get? I want a low interest rate.

A. Rourke O'Brien, president of Qpoint Home Mortgage Loans, suspects you're thinking of a one-year adjustable rate mortgage, which guarantees a tantalizingly low interest rate for only one year, then may float up. However, he thinks you should also know about other, longer ARMs. The three most popular are the 3-1, the 5-1 and the 7-1, which guarantee the initial rate for three, five or seven years. The interest rates on these all are higher than the one-year product, but lower than a 30-year-fixed.

Q: We're moving to Seattle from California. We'd like to buy here, but haven't been able to sell our California home because of the depressed market there. However, we've found a good deal here. It's a lease-purchase home in need of work. Would it be too risky to move in and do the work, thinking that we could complete the purchase when our California home sells? Could the owner jack up the price after he saw how we fixed his place up?

A. Besides the usual stuff found in a lease agreement, a lease-purchase should stipulate the purchase price and the percentage of rent that will be applied toward it, plus an agreement on how improvements and repairs will be handled. If you enter into such an agreement, the seller is bound by that, and can't increase the price at the end of the agreement, says Bill Pallis, an associate broker with Windermere Real Estate East in Bellevue.

However, Pallis says, "I would caution against making improvements to a home they're just leasing, for fear their other home wouldn't sell" before the lease-purchase agreement expires. If that were to happen, you potentially could spend a bundle, not get the house, and see another buyer get the benefit of all your hard work." If you're really gung-ho to fix the place up, Pallis suggests you stick to cheaper cosmetic jobs. And do remember that major improvements - and certainly anything that would be a code violation like roof or furnace - likely would be the seller's obligation, anyway.

Q: We're buying a house that was advertised as being sold with all the appliances. Now the seller says he's taking the two electric garage-door openers and the home security system (which he bought, not leased) with him because they're not "appliances." I say they are. Unfortunately the sales paperwork doesn't specifically list the appliances. Who's right?

A: Pili Meyer, an agent with Coldwell Banker Uptown Realty in Port Angeles, says it's a pity your purchase agreement doesn't enumerate the appliances because it should. Otherwise, the general rule is that any appliance that's installed - like a built-in microwave - stays, and any appliance that isn't installed - like a microwave on a counter - is the seller's. Meyer says she'd argue that the garage-door opener is installed. As for the security system, it depends on whether it's freestanding or parts of it are installed. If the argument could be made either way, it may take mediation to help you settle this one.

Future advice: Make sure any purchase agreement lists appliances and fixtures that remain with a house. "It's best to have a specified list, including the make and model number," Meyer says, adding, "refrigerators have been switched at closing."

Home Forum answers readers' questions every Sunday in the Home/Real Estate section. Send your questions to Home Forum, Seattle Times, P.O. Box 70, Seattle, WA 98111, or call 464-8510 to leave questions on Home Forum's recorded line. The e-mail address is erho-new@seatimes.com. Sorry, no personal replies.