Member Since 2004

What is the best mortgage for me?

Although the 15 and 30 year fixed rate mortgages are still very good, a great way to save money is with one of our 5/1, 7/1 or 10/1 ARM programs (Rate is fixed for 5, 7 or 10 years and only begins to adjust once each year thereafter). The majority of loans do not survive more than 5 years, so why pay the higher rate of a 30 year fixed when you won't have the loan that long?

TAKE THE TEST: What is the longest time period you have ever had the same mortgage? Even if living in a home for more than 5 years, did you ever pay on the same loan for more than 5 years? If not, a fixed rate for 7 or even 10 years will provide the needed security and predictability we homeowners are looking for. But, we can save up to 1% each year on the interest charged as compared to the 30 year fixed.

Also: REMEMBER, the most expensive part of your loan is the TERM. Just by selecting a 25 year term on a $200,000 mortgage we can save $31,000 in interest paid and not owe the $60,000 that your 30 year loan would have remaining after 25 years. All for an extra $93 per month or $28,000 over 25 years. You save $91,000 for just sending in an extra $28,000.

Can't I save money by just sending extra? Mortgages are not simple interest loans. Call your lender and ask them for the proof that sending extra to principal will reduce next month's interest due. It won't. Only an adjustment to the term will result in this type of savings. Sending extra will pay the loan off early and save interest cost, but it is at the end of your loan, not now.