Question by gobanana516: What are the “cons” for each type of mortgage?
I feel like the lenders I have spoken with are only telling me the good things about each type of mortgage and not the bad.
Also, how easy is it to refinance to a different type of mortgage? For example, switching from interest only to fixed. Is it possible to do this after only two or three years?
Answer by CJ
You can switch from interest only to fixed as long as there is no prepayment penalty on your loan. But you will pay refinancing costs, keep that in mind. See if it’s worth it in the long run, depends on how long you are going to keep the house.
There kind of is no “good and bad”, the lenders are just telling you what programs you qualify for. You need to choose what you want to do. The worse your credit is, the worse your loan program will be. If you have bad credit, not great job history, and no $ , your loan program choices will be very limited (if you can get approved at all). ARM’s have low payments, but adjust after 5 years or so. If you are going to be in the house awhile, do not get an ARM. Rates for 30 year fixed are good right now, though. That’s a long term loan.
What do you think? Answer below!