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New Orleans Condos, Ten Years is a long time! Time is on your side?

    Knowing how long you plan to stay in your condo can have a big impact on your monthly note.  Ten years is a long time, think about what you were doing ten years ago?  The rate for 10 year fixed rate loan can be as much as 3/4 point lower as that of a 30 year fixed rate Loan.  Both loans are fixed and are paid off like they are a 30 year term.  Loans are figured with a risk factor and a 30 year loan is riskier than that of a 10 year loan. 

     Many lenders may not mention the variety of loan choices as they would rather lend you many at 6.5% rather than 5.75%.  Most people stay in a home for something like 8.5 years as an average.  If you look at condo the time is often less due to a number of factors that deals with the lifestyles of the people who buy.  People get married, are transferred, are promoted, opt for a home, opt for another condo among a variety of reasons. 

     What does this mean for you?  You can get a loan for 200k for 10 years at 5.75% which costs you $1168 for principal and interest.  You can get a 30 year loan  at 6.5% for $1266 per month.  The difference is $98 per month.  If you stay in your condo for five years you save almost  $6000 and you could have saved that or invested it.  The gap between the loan does change so the gap may be smaller or larger depending upon the interest rate markets.  You should always save as time is money.

     If you know your time is going to be shorter then this is definitely something to consider.  How do you come out ahead?  Remember rates have been moving around a lot lately so its always a must to check and ask about the fees. Eric 

  

10/1 ARM

     ” The interest rate for this loan will stay the same for the first 10 years. The term for this loan is 30 years. At the end of the first 10 years this loan will automatically adjust to an adjustable rate mortgage. Usually the adjustable rate mortgage is a one-year Treasury arm. The interest rate for this loan will adjust once per year. The first adjustment may be larger than the remaining adjustments. You should check to see if this loan has a cap on the maximum it would adjust at the first adjustment. The loan should also have a cap for the maximum percentage that it can adjust each year after the first adjustment. Usually with a treasury arm loan the cap is 2% every year. You also need to check that this loan has a cap on the maximum percentage it can adjust during the term of the entire loan. Be sure to calculate your payment based on the total maximum payment your loan could ever reach. That way you will know if you can make that payment without any financial difficulty.”



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Eric Bouler Realtor
Gardner Realtors
Metairie - New Orleans, La. USA