house hacking question

[Ockert Kruger]

the idea behind 'house hacking' is you move into the house/mfh in order to get a better interest rate, but when you move to the next place won't the bank change your mortgage to an investment property after 5 years when you need to reapply? or does this assume you take a fixed mortgage for 25 years - although I've seen experienced people say that variable interest usually saves you more than fixed.

[Michael Dumler]

@Ockert Kruger the five year reapplication is only pertinent to interst-only loans, not fixed rate mortgages. The real advantage of house hacking is not necessarily to acquire a low interest rate, but rather more to utilize a low down payment. For example, FHA insured loans require the borrower to bring 3.5% to the closing table as a downpayment, while many conventional occupation loans only requre 5% down. Furthermore, with interest rates at all time lows, I highly advocate that you take advantage and lock in your rate. If you acquire an asset that helps cover the mortage plus some, there is no significanlt reason to use an interest-only loan. Hope this helps!