Fixed vs variable mortgage
Okay, I am really stressing over our loan decisions. We are getting a 550,000 loan for a new home construction. We planned on using our land as collateral so dont have quite the full 20% saved up. So in order for us to lock in our interest rate for 30 years, it would have to be sold to a mortgage company and the mortgage companies do require the 20% down, they wont accept land. So our other option presented to us was an ARM 5/5. Im going to talk with this lender tomorrow to see what the caps are. Am I crazy for even considering this route with interest rates so low? It would probably take us another year to save up the rest of the 20% down so interest rates may not be that low in a year. The thing that looks appealing to us with the ARM is the first 5 years interest rate is 3.25% and I could make double payments on this amount. So should I take the gamble of the ARM or wait it out another year to lock in a fixed rate?