Reply to Which home financing option should I choose?

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[quote=Anonymous][quote=Anonymous]OP here, thanks.  And what if we won't pay it off in the next few years?  Go with Option 1?

I just looked at a chart with the prime rate forecast and it is forecasted to be 5% by Feb. 2016, which would put me at 5.5% with the added margin.  So then I'd be in the same position as Option 1, but I'd still only be paying interest in Option 2, whereas in Option 1, I'd be paying down the principle?  If I was in Option 2 at that point, would I just refinance to something else if the prime + margin got too high?  I'm kind of confused what happens after the 5 year interest only period too.  [/quote]

It'll cost you to refinance Option 2. Some might build the closing costs into the rate, but one way or another, you'll pay to take a new loan. And, honestly, if you don't build enough equity, you may have difficulty refinancing at all.

What's the purchase price on the home? How much is the 10%?

The other possibility is to find a loan that lets you just put 10 or 15% down and prepay the PMI. You'd have to run the numbers on that though. A lot depends on how long you expect to be in the house.[/quote]

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