How do you know what mortgage is best for you? - Posted by Shane McKenna

Posted by Tom-Pa on May 03, 2004 at 15:54:38:

Right now I’m sold on the interest only mortgage. You can get in with a very low rate, 3% on 6 month libor, this rate is owner occ. If your looking to be in a property only a couple years than why not the lowest rate you can get. The savings that you have by getting a 6 mo arm could be paid toward your principle or put into an investment thats paying more than 3%. Most of these have a max that they can go up in a year. So in 2 years it wouldn’t be as high as a fixed rate.

A 30 year fixed is at 6% today. Points are what is charged by brokers in order to get paid. One point is one percent of the loan amount.

How do you know what mortgage is best for you? - Posted by Shane McKenna

Posted by Shane McKenna on May 03, 2004 at 15:35:25:

There are so many different mortgages out there with so many different rates; it’s hard to know for sure what is best for you. There are 2,3,5 year arms, 7-10 year arms, 15 & 30 year fixed rates. Interest only loans where you only pay the interest payment for the first 10 years.
The problem with me is I don’t know for sure where I’ll be in 5 years. I don?t know where the rates will be 10 years from now so I may not want a 10 year arm. I am looking to get into a house to build up my equity. In the future I’d like to get a house at a good deal, and then rent it out for a few years, and then flip it for a profit. What kind of a mortgage is best for that? What if it is your first house, and like many say you may not be there long. But in the back of your mind you don?t want to have to be subjected to higher interest rates because of an arm? If you don?t want to risk anything obviously get a fixed rate right?
What are the 30 year fixed rates at right now for someone with a credit score in the mid 600’s? Also on the subject of mortgages what are points? Sorry for such the dumb question, but I don?t know exactly what it means to pay a point.
If anyone can reply with some experience or knowledge on the subject I’d appreciate it. I was wondering if there was a rule of thumb for what kind of a mortgage to get into for each situation. If you are going to hold onto the property for a while for yourself or maybe rent it out a fixed rate may be best. But if you are looking to only own the house for 12-24 months then a 2 year arm may be the way to go.
What do you suggest doing if you aren’t sure how long you’ll be in that particular house?
Thanks, Shane

Re: How do you know what mortgage is best for you? - Posted by Floyd

Posted by Floyd on May 05, 2004 at 17:17:56:

There is no “best” mortgage. There are numerous options that you can utilize to your benefit. If you want LOW monthly payments, that is one thing. But if you want LOW monthly payments for a short period of time that is yet another option. What will fit your particular financial situation should drive the mortgage selection process, not some formula.

Re: How do you know what mortgage is best for you? - Posted by billymortgage

Posted by billymortgage on May 04, 2004 at 13:43:08:

Shane that is why a reputable and knowledgable mortgage profession could help you define out what mortgages are best for you. If you had that answer you would be the mortgage professional probably offering the consultation and placing loans.
Financing does take more then a few numbers and an application most people have very little idea of all the complexities, laws and challenges that each deal brings that most experienced mortgage professionals can head off or outline for you during your initial consultation.

Re: How do you know what mortgage is best for you? - Posted by Brian

Posted by Brian on May 04, 2004 at 11:17:31:

The different loans are for different situations and each has its ups and downs.
I personally have a 15 yr fixed on my prop…I got it when rates were best and it is 4.25 fixed I will crunch down the principal quickly and I liked this for me
3/1 5/1 7/1 are for people that either dont plan on being in the home past the time of low fixed rate or know they will have to watch the market and refi out of it eventually
Down side is the adjustable period as the margins are high and they would end up paying a little more…
These loans as well as Interest only loans allow people to purchase homes that they normally wouldnt be able to afford with a fixed 15 yr or 30 yr fixed
The difference between a 15 yr and a 30 yr is usualy not as much as people think Probably a little more than one payment a year and you can cut the time till pay off in half and SAVE a TON of money…
Hope some of this helps answer your question
If you have more fill free to email Me

Re: How do you know what mortgage is best for you? - Posted by jeff

Posted by jeff on May 04, 2004 at 07:12:51:

You answered you own question.
If you plan to hold the property for a long time, rent it or the like. 30 yr fixed. I do not like 15 year mortgages however I do have a property with one, I think it is better on rentals to keep your payment low and create cash flow. If you know this is it I am staying here for life then maybe a 15 is good for you.
I have a LIBOR ARM at 2.75 on a property, this is a nice mortgage right now, but this property is a 2 year live in rehab I wanted low payments for the time in the property and my repairs and appreciation will cover my profits not paydown. Be carefull about selling for profit in less than 2 years you could get hit with capitol gain tax. With rates at 6-7% I would not suggest a ARM on a property you plan to keep. You should be able to get cash flow with a fixed rate and why risk the maximum rate in years to come. If rates go to 9-10% over the next few years then I will say use the ARM in hopes rates will drop and you could refinance in the next few years, but 6% is a great rate think of the long term savings if rates climb.
good luck.