According to real estate expert Samantha DeBianchi, founder of DeBianchi Real Estate, home buyers may want to consider funding their next personal residence without worrying about 30 year loan terms. What she is referring to, is the consideration of mortgage loans with lesser interest rates even if for a shorter term. For example, consider a mortgage with only 4% interest locked in for 5 years. At which time the percent would become variable or you could refinance. There are many other alternative short-term rate options available to buyers who might want to afford more home than the traditional 30 year fixed rate will allow (now that rates have climbed a bit). Why are alternatives worth considering?
Whether we realize it or not, most homeowners move every 5-7 years. That translates into a new mortgage every 5-7 years. Unless you keep the current purchased home as a rental or Air BnB (good idea if you can although most won’t), you are going to get a new mortgage anyway…and the name of the game is affordability of that monthly payment. If you are the type of person that could foresee moving in less than 10 years, than you may benefit from at least talking to a mortgage lender about the different options. Keep in mind that most local banks only offer a limited number of loan options, so we are talking about finding a mortgage broker. If you need help finding one, check out the Property Portal on the Bargain House Network site. But of course, there are many other places to find a good mortgage broker.
If you are an investor looking to hold a property for short-term appreciation (short term being less than 10 years), then alternative rate programs including interest only may be worth considering. Planning ahead may open up a number of other loan options than just the traditional 30 year fixed loan. If it were us, we would at least ask the questions. It is almost certainly better to have more information than less. In the end, you must do what is right for you and your family. We can not and do NOT offer tax, financial, accounting, legal, nor investment advice but we hope this information helps you.