Posted on: 03rd Jan, 2009 07:10 am
I am preparing to re-finance since my balloon payment is due in February. I have 2 options currently - 1 month Libor with a 1.25% margin plus Libor rate ($2000 closing costs) versus 30 year fixed at 5.5% ($400 closing costs). History of the Libor since 1987 shows advantages to paying down principal - no pre-payment penalty. Please pass on comments about the "right" loan for these economic times.
Hi buckbill!
A libor arm will not be a bad option. The libor rates will help you yo protect yourself from negative amortization. Moreover the initial rate is fixed for a period of 6 months to 10 years. However, you should note that in case of 1month libor, the index linked to this loan changes each month as a result of which your payment changes on a monthly basis. So if you can afford that, you can go for 1 month libor.
Feel free to ask if you have further queries.
Sussane
A libor arm will not be a bad option. The libor rates will help you yo protect yourself from negative amortization. Moreover the initial rate is fixed for a period of 6 months to 10 years. However, you should note that in case of 1month libor, the index linked to this loan changes each month as a result of which your payment changes on a monthly basis. So if you can afford that, you can go for 1 month libor.
Feel free to ask if you have further queries.
Sussane