5/1ARM based on 40 years?
 

Hi,
We could not find our dream home. We are buying a home that we are not
going to keep it more than 4-5 years. We need $200k loan. So, we are
thinking of 5/1 ARM with one point to keep the interest rate as low as
possible. Our Mortgage broker's rate is %4.25 based on 30 years. But
he is advising to go for the higher rate but based on 40 years which
means lower monthly payments. BTW, we are just paying the %20 down
payment but have some cash to buy more points to lower the rate but
the recovery time would be too long.
We would like to hear your suggestions. What's the catch here?
Thanks,
Al

5/1ARM based on 40 years?
 

Al wrote:

We would like to hear your suggestions. What's the catch here?

For the different loans compare total amounts paid over that time
(including loan costs) and how much equity you build and not the
interest rates.

5/1ARM based on 40 years?
 

In article ,
Al wrote:

We could not find our dream home. We are buying a home that we are not
going to keep it more than 4-5 years. We need $200k loan. So, we are
thinking of 5/1 ARM with one point to keep the interest rate as low as
possible.


One point is costing you about $2000. How much are you saving by paying it?
I would think twice about paying any points on a house I don't intend to
live in long. What is the point buying you?


Dimitri

5/1ARM based on 40 years?
 

On 12 Aug 2003 21:01:25 -0700, someone wrote:

...But what about going for 5/1 ARM based on 40 years?
Al

How much lower could the payments be? In the 1st few years of a 30
year loan, the payments are nearly all interest anyway, hard to see
that there would be much room to save much if the rate on the longer
loan is higher.

Check an amortization table, see what the difference in your equity
would be after 5 years, decide if this is worth the minimal difference
in payments.

Is this the mortgage broker pushing the longer loan? What is his
commission on the 40 yr vs. the 30 yr?

-v.