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Choosing A Loan
What kind of loan should you choose? Consider the lower cost and higher risk of an adjustable rate mortgage over a 30-year fixed rate loan.
According to the mortgage industry, the average homeowner refinances his loan or sells his home within 5 years. If you're going to move or refinance your home within 5 years, choosing a 30-year mortgage doesn't make any sense. You're paying for stability you'll never need.
Instead, consider a 5-year or 7-year adjustable rate mortgage. The interest rate is fixed for the first 5 or 7 years, so the loan gives you some of the same stability of a 30-year fixed rate mortgage. But you may save anywhere from .50 to .75 percent over the rate of a 30-year fixed rate mortgage.
On a $100,000 loan, that savings translates into $50 per month, or $600 per year.
Ilyce Glink is the bestselling author of 100 Questions Every First Time Home Buyer Should Ask, and is the Managing Editor of Right at Home Daily.
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How Do You Create a Good First Offer?
You've found the house you want. The market value is reasonable, given the condition of the home. And, you have some idea of what it will cost to fix it up. Now it's time to make the all-important first offer. Margaret Crane has some tips.
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