There is little doubt about rates going up so I would go fixed it will save you thousands over the long haul. Look at it like this:
$116,000 * .0045833 (5 1/2% / 12) = $531.67 Interest $116,000 * .0054167 (6 1/2% / 12) = $628.33 Interest In real simple terms you if you get an adjustable rate and it goes up 1% the interest alone will increase about $100 a month (based on the initial loan amount). That means your payment will go up at least $100 a month. That 1% increase in your interest rate equals about an 18% increase. What if your rate goes up 2% or more over the next several years? The reality is if you get an ARM (adjustable rate mortgage) you will probably start with a much lower rate. But that only increase the percentage of the increase. For example if you have a 5% loan and increase it by 1% to 6% that is a 20% increase in the interest rate. But if you have a 4% loan and it increases 1% that is a 25% increase in the interest rate. $116,000 * .00333 (4% / 12) = $386.67 in interest $116,000 * .004167 (5% / 12) = $483.33 Difference $96.66 or 24.99% Increase in your monthly interest hence increase in your payment. When I calculated a 15 year monthly vs. bi-monthly I think the pay-off was about 18 months early. However, you have made 13 extra payments during that time. So of your 18 months of savings you have really paid for 13 1/2 of them giving you a savings of about 4 1/2 months payments. Confidentiality Notice: This message including any attachments is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender and delete any copies of this message. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Message: http://www.houseoffusion.com/lists.cfm/link=i:5:190666 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
