Which Mortgage Is Right For You?

So many lifestyles, so many loans…which one goes with which? Bankrate has a tool that matches your lifestyle to one of 8 different types of mortgages. You’re bound to match one of them, right? —MEGHANN MARCO

What type of mortgage is best for you? [Bankrate]
(Photo: tlindenbaum)

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  1. BillyMumphry says:

    The one that is right for you is a 15 year fixed…mayyyybe 30. But it stops there. If you require anything else you can’t afford the house. Don’t give me shit about “it’s an investment!” either. Would you take out a loan to buy stock? Probably not.

  2. thrillhouse says:

    Wow, nice. More terrible advice from Bankrate and exactly why you shouldn’t take advice on this sort of thing from bankers (ie. the people selling you the products).

    A recent grad needs to go rent, cheaply at that, and stack up some cash before even thinking about a house. but what better time to make a bad decision, than when you’re young and volitile.

    An ARM is a terrible product and one very inaccurately described by BR. The ARM was not created to accommodate fluctuating incomes, or whatever BS they were pushing. The ARM was created back in the days of double-figure interest rates as a method of transferring the risk of rising rates from the bank to the customer. Plain and simple. They didn’t want low interest rate loans on the books, when rates were hitting highs. Still want an ARM? Rates have been at 40-year lows, where do you think it is going to go? Also, these adjustments are not as simple as they may sound and are often done incorrectly. On top of that, they are recommending an ARM with the intent to refi later? Go ask these people caught in the housing bubble about refi-ing their ARMs. Their loosing their arms and homes for that matter.

    In it for the long haul? 30-yr mortgage! Why didn’t they recommend a 40-yr? or 50-yr? Long haul means you want to be in debt forever, right? The sooner the bank is out of my life, the better.

    And of course, they couldn’t do this without the interest-only loan rearing its ugly head. Its all roses and milk and honey in Interest-Only Land! Like many of their recommendations, this one hinged on being able to read the future 3-4 years out. A lot can change, A LOT. They fail to mention that the interest-only period is not indefinite, and once that 5 or so odd years is up, you either pay off the balloon payment or refi.

    And then there’s the VA loan. Once a great benefit to those serving in the military and a legit product. Now unfortunately, it is rarely a better option for vets when compared with FHA or conventional loans. It does, on the other hand, look to be a great way to get into a much more expensive home as Bankrate seems intent on doing here.

    Bankrate – for bankers, by bankers. Buyer Beware.

  3. Shutterman says:

    I’m usually not one to criticize, but the site would be more useful is it explained the details of loan it suggested.

    I’m always a big fan of fixed interest and knowing exactly what I”m going to be paying from one month to the next.

  4. AnnC says:

    @BillyMumphry: I may not borrow money to buy stocks but plenty of people do; it called margin.

    ARMs are useful for people who plan to sell before fixed period expires.

  5. fencepost says:

    I went with an ARM when I bought my place 5 years ago after asking myself two questions: “Do I see myself living in this place for more than 5 years?” (maybe) and “Do I see myself living in this place when I turn 40?” (unlikely).

    Based on those answers, I went with a 7-year ARM. Got a better rate than I would have on a longer fixed-rate loan, and as it turns out I was probably pretty close since I’m getting married and we’re likely to move within the next 2 years.

    The main thing that might have made a fixed-rate loan a better choice was if I could get a transferable one that could be assumed by the purchaser at (likely) lower rates than otherwise available, but believe those are a rare beast these days.

  6. @Thrillhouse:

    As a Mortgage Broker, I just want to clear up your statement regarding the VA loan. In my mind it is a far superior product to FHA and other conventional loans, as it does not require mortgage insurance when borrowing over 80% of the home’s value (almost every other conventional loan requires it). While MI is now tax-deductible, if you can get a VA loan, by all means do so as the rates as of recent have been at or below conventional/FHA loan products. Couple that with not having to pay MI each month, and you are sitting on one of the most inexpensive fully amortizing mortgage payments.

    As for your logic with ARMS and 40/50 yr loans, I can see where you are coming from. The ARM is a dangerous product for some, and I only recommend it for people who are buying on the short term. 40 year loans are stretching it, and out of principal I won’t do a 50 year. However, with something like 90% of loans being sold or refinanced inside of 5 years, most people are taking the mentality of “this is not the home I will retire in, let’s just get the payments down and make some $$ on the equity.”

  7. mantari says:

    I found the suggestion of getting a ’30 year loan’ for a long-term stay in a house to be insulting. If they were responsible, they would have thrown in the 15 year or other options.

    Or perhaps just adding another ‘which mortgage is right for you’ category of long term savings.

  8. thrillhouse says:

    @mantari: Very good point, and exactly why I don’t take advice from the person selling the product.