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The Lowest Payment
To get the lowest payment, you must accept some volatility with your
interest rate on the loan. You must determine how the volatility affects
your overall financial goals.
The loan with the lowest payment is the option adjustable rate (see #1 and #2
on Hot Loan Programs). The minimum
payment is based on a discounted "teaser" rate. You have the option of
making a minimum payment, interest-only payment or the principal and interest
payment also. If you make the minimum payment your principal balance can increase.
Why would you choose this loan? You would choose this loan to buy a more expensive home. This
loan allows you to borrow more money given a certain payment you are comfortable with.
You would choose this loan if you believe your property will appreciate more than the principal
balance will increase.
Finally, you would choose this loan if you have a better use for the money you have saved from the
reduced payment. You may need to pay off consumer debt or have other investments that are a
better opportunity.
The savings on the monthly payment can be substantial. For example, an option adjustable may
have a "teaser" rate of 1.20% for $1,000,000. The payment is $3309 per month.
Compare that to a fixed rate at 7.00% for $1,000,000. This payment is $6653. The difference is
$3344 per month! That difference can mean an extra bedroom. Or it can mean living in a more
desirable area.
I can help you figure out if this type of loan makes sense for you.
interest rate on the loan. You must determine how the volatility affects
your overall financial goals.
The loan with the lowest payment is the option adjustable rate (see #1 and #2
on Hot Loan Programs). The minimum
payment is based on a discounted "teaser" rate. You have the option of
making a minimum payment, interest-only payment or the principal and interest
payment also. If you make the minimum payment your principal balance can increase.
Why would you choose this loan? You would choose this loan to buy a more expensive home. This
loan allows you to borrow more money given a certain payment you are comfortable with.
You would choose this loan if you believe your property will appreciate more than the principal
balance will increase.
Finally, you would choose this loan if you have a better use for the money you have saved from the
reduced payment. You may need to pay off consumer debt or have other investments that are a
better opportunity.
The savings on the monthly payment can be substantial. For example, an option adjustable may
have a "teaser" rate of 1.20% for $1,000,000. The payment is $3309 per month.
Compare that to a fixed rate at 7.00% for $1,000,000. This payment is $6653. The difference is
$3344 per month! That difference can mean an extra bedroom. Or it can mean living in a more
desirable area.
I can help you figure out if this type of loan makes sense for you.
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