Which mortgage option is the most financially preferred option?

Question

In trying to avoid making bankers and lenders rich with interest on my money and house purchase, from all the mortgage options available, which is the best option?
-30 year fixed rate conventional, Adjustable Rate Mortgage, 15-year fixed rate conventional, interest only, or 80/20 piggyback?

Answer 1

Depends on your circumstances? The key being, how long do you plan on living there?

If over 5 years, go for a fixed rate conventional. 15 year if you can afford the payments, otherwise 30.

If less than 5 years, an ARM may make sense. Get one where the rate is locked for 3 or 5 years.

During high interest times, ARMs also make sense, because you get the lower rate now, and can easily refinance for cheaper later.

Interst only loans are dangerous. If your home loses money, you can wind up upside-down and may have to sell for a loss later on. But if you are OK with the risk, they make a good way to get in cheap while your property grows in value.

80/20 piggybacks are good for when you don't have much of a downpayment, or none, yet want to avoid Private Mortgage Insurance.

If this will be your primary residence, and you plan on living there for over 5 years, go with the fixed rates and avoid all the pitfalls of the other loans.

Answer 2

It really helps to know more about how long you are going to stay in a house, and how old you are, and also your ability to pay. If you are going to live in a house for the rest of your life, go with a 15 year fixed. You will spend less on interest. You really need to look at your entire financial picture. If you can, Avoid Interest only, or ARM morgages at all costs. The rates on ARMS will go up often, and you will never get equity out of an interest only mortgage.

Answer 3

How about a 30 year fixed rate at somewhere in the 6's. Contact me if intersted.

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513-860-2940 ext 10

Martin Smith

Answer 4

15 year fixed rate unless you can afford a 10 year fixed rate. You can check on bankrate.com on what average rates are for 30 & 15 year loans to ensure that the fixed rate you are able to attain is competitive.