Financing in Hoboken>Question Details

AC, Other/Just Looking in Whippany, NJ

Hello, I'm a first time home buyer and was curious what would be my best mortgage options. I plan on living in my condo for 3-5 years. Depending on

Asked by AC, Whippany, NJ Tue Oct 13, 2009

how the market goes, I would either sell or rent it out later. Can someone explain to me what are the advantages/disadvantages between a 30 year fixed, adjustable rate mortgages (arm), and interest only loans?

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plans change. you may not live there for 3-5 years. it could end up being more or less. stay away from ARMs - they killed millions of borrowers over the past 5 years. 30yr fixed is way to go.
0 votes Thank Flag Link Thu Dec 8, 2011
AC,

It seems that most of the answers below will be helpful. I would add that you need to make sure that you don't cash-strap yourself. Putting 20% down is a lot of money, and a great idea if you have it. Just make sure that whatever mortgage you decide on will leave you with enough cash-flow on a monthly basis to prevent crippling your lifestyle.

I won't tell you to forgo a 30-yr. fixed, but if your loan balance will be $250,000+ you'll definitely notice the difference in monthly payments on a shorter-term loan like a 5-yr. ARM.

I think you should spend some time deciding if you plan to sell the place or rent it. If you'll be selling it, a 5-yr. ARM (interest-only or fully amortizing) will be of great benefit. On the other hand, if you're fairly certain that you'll be renting it later, rates on the 30-yr. fixed products are pretty amazing.

One question I'm not sure anyone else has asked- is this place just one of several properties that you are considering accumulating for rental potential or a one-shot deal? If you plan on buying more in the future then you should strongly consider the ARM products to ensure good liquidity.

Call me if you have questions, and good luck.

Kind regards,

Jason Diperstein
E Mortgage Management
800.793.9633 x156
jdiperstein@emmloans.com
http://emortgagemanagement.com/?page_id=72
0 votes Thank Flag Link Wed Oct 14, 2009
AC, good luck with your home shopping! Based on a 300k purchase price and a 240k mortgage, on approx. principal and interest payment would shake out like this:
30 Year Fixed at 5.125% (5.16 APR) $1306.77
5/1 ARM at 4.375% (4.41 APR) $1198.28
5/1 Interest-Only 4.625% (4.65%) $ 925.00

Personally, I feel you can't go wrong with a fixed rate particularly if you plan on renting out the home in the future. Here is a blog I wrote about arm loans as well: http://activerain.com/blogsview/1008741/when-is-an-adjustabl…

Good luck and feel free to contact me for more detailed information.
0 votes Thank Flag Link Wed Oct 14, 2009
Wow Ac.........................you're in great shape.............good credit and 20% down! Good for you!

You will have a lot of options available.
When deciding on a mortgage option, your personal needs should be taken into consideration.................some people feel reassured by having a 15 or 30 fixed rate loan.- they want to know what their exact payments will be each month, with no changes or surprises............some people are more open to adjustable loans, and willing to risk higher payments if the rate goes up........it all depends on your personality .............and, lifestyle factors into it, as well. Is your income steady, or do you receive commissions or bonuses?

Lots of questions will go into finding the plan that's right for you.
Personally, I would stay away from any interest only loan!!



I am happy to help......
Debbie Rose
email: Debbie.Rose@PrudentialNewJersey.com
0 votes Thank Flag Link Tue Oct 13, 2009
My credit score is between 720-730 and I've been looking at condos listed between $275K and $340K. I'll definitely put 20% down to avoid PMI...
0 votes Thank Flag Link Tue Oct 13, 2009
Hi Ac
I am not far from you........... in Livingston.
Your question needs a detailed answer - one that is best done in a conversation.
I am very familair with the condos in Whippany, and have sold several there...are you moving elsewhere or staying in Whippany?

My company has an in-house mortgage rep who would be more than happy to give you detailed information on what loans might be appropriate for you. There is no obligation to work with him- it's just an accommdation we offer.

I can explain the differences in the mortgage options you have - after 25 years in the business , I have helped a lot of first time buyers, and it would be my pleasure to help you..and answer any questions you have. My son and daughter-in-law will be first time buyers in the next year, so I can appreciate how overwhelming this all can be,as I will be going through it with them soon, too!

Please feel free to call me at your convenience!

Best wishes
Debbie Rose
Prudential NJ Properties
email: Debbie.Rose@PrudentialNewJersey.com
cell (973) 715-3131
office (973) 992-6363x122
0 votes Thank Flag Link Tue Oct 13, 2009
Hi there.....

Well, we need to first figure out what would be best for you and what you qualified for. Meaning, what kind of mortgage. FHA, conventional, VA, or USDA. But to jump to your question, a FHA 5/1 arm is a very good choice then, if you plan on staying for 3 to 5 years. But a main concern first pops into my mind. You want to buy a condo and this is even tougher, both FHA or conventionally. There are much more restrictions and guidelines recently on condos than ever before.

Getting back to your question though. To determine all of this, the purchase price also matters. One reason is because the difference in payment won't be as great, as large, if the purchase price for arguments sake is $150,000 as opposed to $350,000.

Overall, there are too many unknowns in order to give you an accurate answer to your question. In regards to Interest Only loans, these are only with conventional loans. Secondly, you need very good credit scores and money done. Which goes back to the unknowns.... fico scores, down payment amount, cash on hand, etc, etc.

Please don't hesitate to call me if you want to discuss the particulars further.


thanks,
Jeff


Jeffrey J. Belonger
Area Manager

Infinity Home Mortgage Company, Inc
Processing : 800-587-2762
Cell : 609-440-5133
Fax : 775-361-6619
e-mail : jbelonger@ihmci.com


Good Faith Estmates - All you need to know - http://activerain.com/blogsview/1082156/good-faith-estimates…


Profile : http://www.activerain.com/jeffmortgageman


"The referral of my service to your friends and family is the highest compliment I can receive."
0 votes Thank Flag Link Tue Oct 13, 2009
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