Tuesday, May 27, 2014

A New Alternative to the Fixed Mortgage

I've always been a 'fixed' rate mortgage kinda-guy. I liked the fact that the rate stayed the same and allowed us to plan out our expenses, month after month. We also liked the 30 year mortgage, since it minimized the required monthly payment. We recognized that a 15 year fixed mortgage provided for a lower interest rate (currently a full point lower), but at a substantially higher required payment. At the time the 15 year mortgage payment was prohibitive.

Enter a new alternative. How about a 30 year loan that's fixed for the first 15 years, then 'adjusts' once (only once!) for the remaining 15 years? How about if the starting rate is just a small increment above the 15 year fixed rate, but still well below the 30 year fixed rate?  Since the average mortgage is held for only about 7 years, this seems a no-brainer.

Of course this loan has some fine print, but doesn't seem to be too unusual. It has a 'jumbo' upper loan limit of $2M. This mortgage is offered by Prospect Mortgage, which as an office in Orleans. Call them at 508-862-6175 for more details.

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