Expert: Ron Bauer - 6/18/2007

Question
Hi ron I am looking at buying some water front property and
plan to sell it 3 years down the road. what type of loan would you recommend? trying to keep payments low Keith

Answer
Keith,

Thank you for contacting me with your question.  It was not clear to me if there was a home (structure) on the property or if you were just buying land.  If it is land only I cannot be of much assistance.

You did not mention if you were putting any money down or if this was 100% financing, primary residence or a 2nd home...  Primary residence options will differ from 2nd home or investment property in which you will likely need at least 10% down.

In any case I would always recommend something that is a fixed rate for at least slightly longer then you plan on keeping it.  At the same time depending on how much money down you are putting the 30 year fixed rates are fairly good these days.  If you want to keep the payment low then you can always look into one with a interest only option.  You get both a fixed rate and a low payment.  Interest only loans come in a variety of flavors as well.  They can have fixed rates from 6mo, 1YR, 3YR, 5YR... all the way out to 30 YR.  Meaning the interest rate is fixed for X number of years.  Typically the interest only portion is only 5 or 10 years long.  Keep in mind depending on the scenario sometimes a 30YR fixed can be the same rate as a 5 YR ARM.  So a good comparison by a good LO needs to be done given your scenario...

If you are doing secondary financing as well, depending on how much you put down, I would still suggest a 30 YR fixed that pays both principle and interest.  Many times the interest rate will be lower then that of an adjustable interest only HELOC 2nd mortgage.

Best of luck!  If you have any more questions let me know.

Sincerely,

Ron Bauer

http://www.ronbauer.org
Lending in all 50 States.