What morgage would you prefer?

[Dylan Thomas]

What would you prefer?

Residential investment property

80% ltv at 4.625% on a 10/1 arm (30 year)

OR

75% ltv at 5.5% on a fixed 30 year

I’m not concerned at all about the 5% ltv up front so please don’t let that be a factor. More looking at interest rates and adjustable vs fixed.

Obviously a lot lower interest rate on the first, but the adjustable rate scares me some. What happens if we go back towards the Carter days when interest rates were up in the high teens? Would be nice to have a fixed rate if we did in fact go there. But if we don’t then it would be awesome to pay 1% less over the term of the note.

What are your guys thoughts?

Thanks!

Dylan

[Jose Batista Abikarram]

Hey @Dylan Thomas this is my opinion only but especially now that we are in an all time low of interest I believed the fixed rate is much better. The percentage difference will make a difference but at the same time you could pay it quicker to save on some interest. In saying that it really depends on your strategy. If you need the extra cash the first option doesn’t seem that bad. It’s certainly a hard one!