Financing in 02474>Question Details

Sshome, Home Buyer in 02474

We want a home loan which we know we will be able to pay off in 5 years. Which is the best mortgage for that ? Are there any 5yr fixed rate mortgages?

Asked by Sshome, 02474 Fri Apr 1, 2011

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Ed Groussman’s answer
If you are certain you will be paying off the loan in 5 years then a 5/1 ARM is definitely the way to go as the interest rate will be considerably lower than any longer termed fixed rate that you can obtain. A 5/1 ARM is fixed for the first 5 years then adjusts annually thereafter( if you still have the loan). I would be more than happy to discuss your options. I can be emailed at egroussman@myhsoa.com

Thanks,
Ed Groussman
Community Banker
Home Savings of America
Member FDIC, Equal Housing Lender
0 votes Thank Flag Link Fri Apr 8, 2011
Maybe a 10 year fixed rate mortgage at good rate with no pre payment penalty. That way if you need a little longer to pay you can use the money for improvements.
0 votes Thank Flag Link Sat Apr 2, 2011
If you know that you'll be paying the mortgage off in 5 years, you'll be better off with a 5/1 ARM or a 7/1 ARM. These are 30-year hybrid adjustable rate mortgages. A 5/1 ARM simply means that the interest rate is fixed for the first 5 years, then adjusts every year thereafter for each of the remaining 25 years. A 7/1 ARM means that the interest rate is fixed for the first 7 years, then adjusts every year thereafter for each of the remaining 23 years. Interest rates for these loans are often much less than they are for fixed rate mortgages, thus enabling you to save thousands of dollars in interest payment. Virtually all mortgage lenders / brokers offer these products.
0 votes Thank Flag Link Fri Apr 1, 2011
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