Looking to hold an investment property for 7 years or less what is the best mortgage I should take?

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The property has 25% equity in it.. My FICO score is around 740. I run my own business so I will need to use stated income. What is best loan for me in this situation and what kind of interest rate should I be looking for?

THANKS!

4 Comments
  1. Reply
    preethi r
    February 11, 2011 at 9:48 pm

    choose according to your income

  2. Reply
    ZCT
    February 11, 2011 at 10:09 pm

    I would take a fixed rate interest only mortgage. A repayment mortgage is hardly going to put a dent in the principle over seven years anyway. Interest only will give a much cheaper payment. You can always make extra payments to the principle if you have spare money. But often it is better to pay down other higher interest debt like credit cards anyway.

    But generally the best option is to have a long hard talk with an expert. There are too many variables involved in each specific situation.

  3. Reply
    yum
    February 11, 2011 at 10:12 pm

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  4. Reply
    lizzgeorge
    February 11, 2011 at 10:53 pm

    Get a 30 yr fixed rate mortgage. With your stats you should be able to get a loan for around 6.25% (maybe slightly higher due to stated income).

    1. You should be able to easily cash flow with that type of mortgage.
    2. Plus your payments are predictable, allowing you to forecast easily.
    3. Equity will build quicker as you pay down principal even if the property does not appreciate in value.
    4. You’ll never have to worry about interest rate fluctuations or refinancing fees. Rates are near all time lows–why wouldn’t you lock in?
    5. Plus these loans are so standard that they come with the fewest fees and origination costs. Your good credit and the fact that you have over 20% equity will get you a great rate and a cheap mortgage; you don’t need some expensive flashy mortgage product designed to make property more affordable.

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