Palm Beach Real Estate and Loans

Options on loan payments?

Absolutely!  

And I am NOT talking about the 'Option ARM' that got so much bad press over the last few years.  It was a good loan IF you knew what you were doing, but it was so often misrepresented that people tend to cringe when they hear the words.

Someone just talked to me about loans in general and, as I typically do, I started talking about the 30 year fixed rate home loan (FRM).

However, he didn't want a 30 yr fixed, he wanted a 15 year fixed.  Why?  So he could pay it off faster.... not a bad idea really - the savings in the amount of interest paid is considerable. 

BUT (you had to know that that was coming...) on a $250,000 loan you are also locked into a monthly payment that's more then $600 higher then for the 30 yr FRM.  Actual dollar amounts will vary depending upon available rates, but the 30 yr FRM will always have a lower monthly payment.

What I would recommend is this: get the loan with the longer term so that the required payment is lower.  If you have a bad month you won't be struggling for the extra money, but you can always pay more and even pay off the loan whenever you want to!

No tricks - since there is no pre-payment penalty - a little flexibility can be a very good thing.

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