Is there anything wrong with getting a 30 year mortgage when I expect to sell my place within 7 years?
February 26, 2008 · Print This Article
veronicamars asked:
Thanks everyone for pointing me toward the mortgage calculator. Follow up question, if you don’t mind. I calc’ed a 15 year mortg and a 30 year mortg and obviously I like the monthly payments on the 30 better! I have my eye on a property that I would expect to appreciate in 5 years. Is there anything wrong with going for the 30 year mortg if I expect to sell in 7 years?
Caffeinated Content for WordPress
Thanks everyone for pointing me toward the mortgage calculator. Follow up question, if you don’t mind. I calc’ed a 15 year mortg and a 30 year mortg and obviously I like the monthly payments on the 30 better! I have my eye on a property that I would expect to appreciate in 5 years. Is there anything wrong with going for the 30 year mortg if I expect to sell in 7 years?
Caffeinated Content for WordPress
Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
No. That’s how it’s done.
Short answer: No.
No mam,You can sell your house even after 1yr if you want to:-)
The loan will pass to the new buyer if he gets approved:-)
no there is nothing wrong with it, but…
what you probably really want to do is go for a 7 or 10 year ARM.
these are still amortized over 30 years, so the payments are lower, like the 30 year fixed, but they will often have a lower interest rate than the 30 year fixed.
Do the mortgages you are considering have fixed or adjustable rates? The 30 year fixed usually has the highest monthly payments. Why not look at a 7 year ARM (or even a 10 year ARM to be safe) - that wil have a fixed rate for 7 years and then convert to adjustable after that.
You can get any kind of mortgage you like.Just becareful with mortgage lender you finance with.They like to scam you.
30 years is fine. It gives you more flexibility than a 15 year loan. If you want to pay down your mortgage faster then you just simply send in extra money on a periodic basis. If you are short on money, then it’s easier to pay your obligations.
You can pay off your house in 20 years by sending in one extra payment each year towards the principal. You can save money by making 2 payments a month (1/2 of the mortgage payment each) because the interest compounds on a daily basis.
nope…that’s fine…hardly anyone pays off a thirty year mortgage over 30 years…they move more frequently than that or refinance into another 30 year loan for a better rate…it means nothing, really.
15 year mortgages are great for folks that want to stay put and be debt free sooner…for them it’s worth the higher monthly cost.
The only problem is that your equity (value of what you put into the property in your monthly payments) increases very little in the first few years. The monthly calculator should have shown you that your early payments are virtually all interest. (since interest is based on a percentage of the remaining balance)
I hope I am making this clear.
Nevermind the reasons why. Remember this: If propery values and prices don’t change much in the next seven years, you will find that the mortgage on the house has not been reduced by much. Not much has been paid towards your principle.
That’s why the 15 year loan may be more attractive, even though the payments are higher. In the seven years, more of your monthly payments will apply to your principle. When you sell the house, you will get more cash back, even if the property value (price of the house) remains the same.
No there’s nothing wrong in going for the 30 yr mortgage, the longer the mortgage the better, because cash flow will be less . If the property appreciates within a seven year time frame your projected eanings would be greater
No, there is nothing wrong with getting a 30 year mortgage for a home you plan to sell in seven years.
By taking the 30 year over the 15 year term, you will save on your monthly expenses.
This is only one part of the equation though, and you are strictly talking about the TERM of the mortgage.
There are several options that need to be made along side the decision on what term you are looking for; for instance, Should you look at a Fixed Rate 30 year or a ARM 30 year? Normally, an ARM will have a lower interest rate than a Fixed rate program, and you can also get a fixed rate for the first 3, 5, 7, or 10 years of an ARM. You could also look at an Interest Only payment option, or a Option ARM, which gives you multiple different payment options every month (a minimum, I/O, 30yr, and 15yr payment options) which is good if you have income that varies every month, or if it’s a rental property and you have a hard time finding a tenant temporarily. These decisions should be based upon the FULL picture of your needs and situation.
Should you worry about pre-payment penalties? If you are not planning to sell within the next one to three years, then don’t worry about it, if you are not sure if you may decide to sell next year then maybe try and avoid it.
You should consult with a professional mortgage planner to evaluate your situation and help shop your specific needs around to a variety of lenders to get a good idea of what is currently available to you.
Actually getting a 30 year fix is better or same as a 7/1 arm or 10/1 arm. If you want the option of 10/1 arm than get a 30 year fix interest only. first 10 years is interest only and on the 11th year turns into the 30 year fix payment. Great product.