| Page 2 of 2 < |
With Many Loan Options, Pick One That Fits Your Needs
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Even then, prepayment penalties, which are fees charged to get out of a loan before its term ends, can make it nearly impossible to get new financing. Declining home values can do the same.
Experts generally agree that the 30-year fixed rate is the safest choice because its predictability is rock-solid. But that doesn't mean other mortgages might not make more sense.
Talk to a financial adviser, read the disclosure forms and get a second opinion -- or more.
Tamara and David Lowin explored their options. In their early 30s, they expect the next 10 years to be full of changes. The couple wanted to lock in an interest rate while they were near all-time lows. That meant getting a 30-year fixed rate.
But they wanted to buy an apartment that would be large enough for the family they're planning to start. They needed the flexibility to make lower payments if one of them wanted to be a stay-at-home parent.
When the Lowins went to finance their new Brooklyn apartment, they chose a 30-year fixed mortgage with a twist. They've locked in their rate of 6.25 percent, but will make only interest payments for the first 10 years.
"I want to sleep at night," Tamara Lowin said.
Elaine Boxer, 33, and boyfriend David Sturek, 36, don't know how long they'll be in the upper West Side apartment they just bought, but they financed it with an adjustable-rate mortgage anyway. They looked at a conventional mortgage but couldn't resist a loan with a rate a half-point lower.
They'll have that rate for seven years, then it will switch to the market rate unless they refinance. It could be lower, but most likely will be higher. In the lending world, that's known as interest rate risk.
"We are not using this ARM as a means to take on more debt than we really should, or to postpone an inevitable financial reckoning," Boxer said.
"We are choosing an ARM because, for our specific situation, it got us the best rate. Based on our financial status, both current and projected, we know what we can and can't handle," she added.
