Posted on: 19th May, 2011 09:10 pm
Hello- I am a first-time home buyer (new construction) and am looking to close within the next month. I wanted to elicit some advice and insight from the community about my mortgages options.
Since this is new construction, I had the option of locking a rate early (ARM only, downpayment of 1pt upfront). I ended up locking in at 3.75% for a 10 yr ARM. I know this is an excellent rate but I'm now considering a 30 yr fixed mainly b/c I'm not sure if I will be owning the house for longer than 10 yrs. Also, as part of the early lock agreement, I have the option to change my mortgage plan at no charge. The current rate for a 30-yr is 4.625. I know this rate is attractively low as well but it's about $220/mo. more than the ARM.
Any thoughts would be greatly appreciated.
Since this is new construction, I had the option of locking a rate early (ARM only, downpayment of 1pt upfront). I ended up locking in at 3.75% for a 10 yr ARM. I know this is an excellent rate but I'm now considering a 30 yr fixed mainly b/c I'm not sure if I will be owning the house for longer than 10 yrs. Also, as part of the early lock agreement, I have the option to change my mortgage plan at no charge. The current rate for a 30-yr is 4.625. I know this rate is attractively low as well but it's about $220/mo. more than the ARM.
Any thoughts would be greatly appreciated.
Hi Guest,
It will be solely your discretion. You can go for a fixed rate mortgage with a rate of 4.625%. As you won't have to pay any charges for the change of the loan. If you have no issues in paying the higher monthly payments, you can change your mortgage plan.
Thanks
It will be solely your discretion. You can go for a fixed rate mortgage with a rate of 4.625%. As you won't have to pay any charges for the change of the loan. If you have no issues in paying the higher monthly payments, you can change your mortgage plan.
Thanks
You can always consider the 30 year and pay more on your loan, monthly, yearly or set up bi-weekly payments
Thanks for the responses. I think if I went with the 30yr, I wouldn't have much room to make extra payments. Whereas, if I went with the 10 yr, I could make extra payments towards the principal. It's a tough choice b/c I worry that interest rates will be relatively high (compared to the current rate) in the future.
it would be the opposite. A 10 year loan the payments are much higher than on a 30 year amortized loan
Not on a 10 year ARM...first 10 yrs are fixed at a lower rate. The yrs after vary by market...