Comparing two loans

[Jared Jennings]

Hello Bigger Pockets members. I am going to put an offer on my first house. I have two lending sources.

Purchase price of $80000

Option one:

3.25 APR for 30 year fixed FHA.

Option two:

The 80/20 is you have a 1st mortgage that is 80% of the purchase price at a rate of 4.625% that is locked for 10yrs.  After 10yrs, the rate can increase or decrease according to the market.  The 20% is the 2nd mortgage that is at 5.625% and that is 10yr balloon…meaning after 10yrs, you need to refinance.  It would be encouraged to refinance the 2 loans into one 30yr fixed rate mortgage within the first 3-5 yrs if you plan to stay past the 10yrs.

Thank you for your assistance.