What is the differences between all these different mortgage terms?
Cindy16 questioned:
I am looking into different mortgage.
Get very confused by so many different kinds of them.
What are the differences?
I am looking into different mortgage.
Get very confused by so many different kinds of them.
What are the differences?
If we are plotting to get a 300K mortgage, and plotting to stay in the house for at least 5 years.
What mortgage might be excellent for us?
30yr fix
5/1
7/1
why there is 5/1 ARM?? What is the different between all these?
thank u
Interest.com has an Brilliant table for checking out all the pros/cons of different mortgages. I believe it’s just what you need:
I would also recommend Bankrate.com for looking up general mortgage rates and subsequent payments. Don’t forget to factor in escrow and property taxes in their estimates.
30 yr fixed is usually safest for the long term because your interest rate and payments remain the same (you can always pay down principal early to reduce total interest and number of payments, as long as you avoid a prepayment penalty).
The 5 or 7 year ARM resets after that number or years which could end up at higher cost and higher payments varying each year after that, depending upon interest rates at that time. The reason for the current mortgage mess is that people who could barely afford the initial rates did not realized how much a 3-4% interest rise would affect payments they could no longer afford. They expected to sell or refi by then, but rising interest rates and dropping property values made that impossible.
It’s very hard to say what mortgage would be excellent for you since I don’t know what your goals are for your kids if you have any, retirement goals, etc. I’ll go with the options presented. Basically the 30 year fixed is pretty simple. You will have the same payment for 360 months. Your interest rate is locked and will not change. The 5/1 arm means that you will make interest only payments for the first 5 years (similar to an interest only mortgage), and the start making principle and interest payments after the 5th year, but your rate is adjustable and will most likely rise. The 7/1arm is the same except your making interest only payments for 7 years, then your loan adjusts. The one statement you make that caught my attention was that your plotting to stay in the house for at least 5 years. Does this mean that you could leave before 7 years? If so, the 7/1 could be an option. If you know your not staying in the home for more than 7 years, why pay the principle? If your not sure, then go with a fixed product as life happens then all of the sudden, 7 years later your payment doubles and your budget is shot. Your right, there are many, many programs out there, but the job of your broker or loan officer is to talk to you, know you and customize a mortgage solution that not only steers you in the right path now, but achieves your future goals. Excellent luck and feel free to question any questions
Have a look at most of your questions will be answered.