- Dec 18, 2001
- 24,037
- 21
- 81
So I'm doing a loan comparison...
And I see that a NET 5 loan has one of the lowest interest rates. Plus, for the first 5 years you pay directly on the interest. After 5 years, its just like an ARM loan - the interest is changed annually and you pay on both the principle and interest.
So... how do I use this to my advantage? I would think the trick is to pay more than the monthly payment, which I think would cover principle, so after 5 years the new payment is actually much lower than it would have been.
The risk is not knowing what interest rates will be like 5 years from now. Any guesses? Would this be a bad idea for a mortgage right now?
And I see that a NET 5 loan has one of the lowest interest rates. Plus, for the first 5 years you pay directly on the interest. After 5 years, its just like an ARM loan - the interest is changed annually and you pay on both the principle and interest.
So... how do I use this to my advantage? I would think the trick is to pay more than the monthly payment, which I think would cover principle, so after 5 years the new payment is actually much lower than it would have been.
The risk is not knowing what interest rates will be like 5 years from now. Any guesses? Would this be a bad idea for a mortgage right now?