If I can afford the purchase price on a house, what is the best mortgage to get with the lowest rate?
December 20, 2008 · Print This Article
energystats asked:
I have more than enough money to afford to pay for a house in full. However, I think I can get better returns on my money than the cost of a mortgage. What is the most aggressive mortgage I can get, knowing that I can always pay it down in the event that I need to?
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I have more than enough money to afford to pay for a house in full. However, I think I can get better returns on my money than the cost of a mortgage. What is the most aggressive mortgage I can get, knowing that I can always pay it down in the event that I need to?
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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.
Get an interest only loan or consider an ARM, or a 40-year fixed, a 30-year fixed or lesser year fixed.
If you can put your lump sum of money in a (safe) investment that can consistently get higher returns than the interest rate you’re having to pay on the loan… good idea. If you’re considering putting the lump sum in an investment that would spit out the mortgage payment each month, you’re credit rating will go up too. If you’re considering putting the lump sum in a tax-deferred retirement account, like a variable annuity, just consider what monthly mortgage payment you can afford until you’re 59.5 years old.
What you are asking is a dated question. You should get 5/6% interest and a 30 year mortgage that will not punish you for early payoff. The problem is that you can write interest off and people get into trouble because they go up a notch in price than down where if something goes wrong they can still afford the house. Where you need your money is a cash dividend life insurance policy that not only pays upon your death but you can access the cash at will. Look into it. It is the new 401k of the century. Imagine in 15 years it paying for itself and then you keep adding small policy’s? It is like the old money market days.
The mortages that will habe the best interest rates and will save you the most money are short term loans. Five, 7, 10 and 15 year mortages are better. E
When you look at the total amount paid over the life of the loan again the short term are the best. As an example on a 30 year mortage you will pay back about 3 1/2 times the value of the house. On a 15 yr loan you will pay back about 2 times the value.
You can get even better if you go with a 5/1 or 7/1. These are short term with a baloon payment at the end..
If you are trying to keep your payment to the lowest possible then go for the 30+ year mortage, but it will cost more in the long run.
I haven’t said anything about interest. That comes from two things, your credit score and the loan type.
If you would like a 50 year mortgage, that’ll really be a low rate. Contact me if you’re interested.
It sounds like you you want a loan that will allow you the flexibility of maximizing your cash flow, but still gives you the option to make extra payments at your leisure. There is a program that is fixed for 5 years, has great low rates (depening on your credit and financial situation), and offers different payment options every month. It is in my opinion the most aggressive type of mortgage there is because the payment options are flexible, you can pay more or less when you want to. Feel free to email me at for more information.
Good Luck!