Is an adjustable, interest only 5 years or a fixed loan for 30 years best?

Answer 1

what is your capacity to pay? if your query is...a fixed or a variable rate is best, it depends on the whole financial scene because a fixed rate of interest gives you a budget to work with knowing fully well how much you have to pay. a variable interest on the other hand makes you succeptible to the volatility of the interest rates, which is dependent on a lot of things. now, to prolong a loan you can pay off in five years to 30 years, would only be wise if you are able to put the money to better use, if not, why bother prolonging the loan period?

Answer 2

Interest only five year loan means everything is due in five years.
Only good if you plan on selling or re-financing in five years or less.
in those five years you woud not have paid any of the original loan amount--only the interest. the creditors would have made their money and the only value increase you will have is if the property value has increased--equity. adjustable means-if the interest rates go up, your payments go up, getting nothing else for it. the creditors just get more money.

fixed loan means payments stay the same, at what ever amount it was in the beginning. interest rates can go up or down with no effect on your payments.
your payments will be partially interest and paying the loan. if you can pay more than the minimum owed each month--the extra goes to paying the loan only not interest. that way you can pay off the loan earlier than calculated.

Answer 3

Depends on what you think the future interest rates will be and what you think your future ability to pay will be.
A 5yr. int only adjustable will have lower initial payments, but they could rise sharply. A 30yr fixed has fixed payments for the life of the loan. "Best" depends on many other factors. The 30 yr. is "best" in the sense that you know immediately what you will pay. The adjustable might be "best" if you think interest rates will drop sharply or if you think that your income will go up sharply....