Posted on: 08th Mar, 2007 11:01 am
We purchased a home 8 months ago w/ 3yr I/O @t 6.375% and a HELOC. We paid the HELOC out of the sale proceeds of the other house.
Is is wise to refi now at 5yr I/O @5.625% or get a 30 yr. fixed @6.0%. (0 pts and closing cost $2500-3000)? We intend to pay extra towards principal whenever we can. We don't know how long we're going to keep the house but like to build equity anyway.
Thank you.
remon
Is is wise to refi now at 5yr I/O @5.625% or get a 30 yr. fixed @6.0%. (0 pts and closing cost $2500-3000)? We intend to pay extra towards principal whenever we can. We don't know how long we're going to keep the house but like to build equity anyway.
Thank you.
remon
If you are not planning to stay for long then a 5/1 arm can be selected but in the long run a frm would be better as a 6.0 with 0 points is reasonable rate you are getting when the present rates are nearabout 6.4%.
"We don't know how long we're going to keep the house"
If you have plans of moving out within a few years before the rate changes on the I/O then it is a good option to choose at 5.625%.
thornock
If you have plans of moving out within a few years before the rate changes on the I/O then it is a good option to choose at 5.625%.
thornock
Hi Remon,
Availing ARM or Fixed rate mortgage is not very big factor for building equity. Choosing ARM or FRM is completely depending upon the period you are thinking to stay on the house.
But since you are not quite sure about the staying period, so I suggest you to go for ARM. And over here since you need to pay less interest than FRM, so it may help you to build equity little faster than FRM.
Thanks
Availing ARM or Fixed rate mortgage is not very big factor for building equity. Choosing ARM or FRM is completely depending upon the period you are thinking to stay on the house.
But since you are not quite sure about the staying period, so I suggest you to go for ARM. And over here since you need to pay less interest than FRM, so it may help you to build equity little faster than FRM.
Thanks
you are asking two different questions, actually. The fixed vs. ARM as "helping_user" pointed out is really a question of how long you intend to stay in the home and thus how long you need fixed rate financing. Long-term fixed rate financing is just an "insurance" against future high rates.
You can get an interest only loan that the rate is fixed for 30 years. Interest only is not exclusive to fixed period arms like a 3/1 or 5/1. The interest only calculation question is if you have inconsistent or fluctuating income you will benefit from interest only payments which are lower. However, if you are going to pay more each month, then interest only loses it's appeal. Interest only is designed as a benefit for those who are only going to pay the lower, interest only payment. Otherwise, take the lowest interest rate you can get.
good luck.
You can get an interest only loan that the rate is fixed for 30 years. Interest only is not exclusive to fixed period arms like a 3/1 or 5/1. The interest only calculation question is if you have inconsistent or fluctuating income you will benefit from interest only payments which are lower. However, if you are going to pay more each month, then interest only loses it's appeal. Interest only is designed as a benefit for those who are only going to pay the lower, interest only payment. Otherwise, take the lowest interest rate you can get.
good luck.
