5/1 ARM Mortgage and change to 30 year fixed conventional Loan !! Options

Great question- I assume that you are in a contruction loan right now that is currently on a 5 year term, based on the information that you provided. Normaly construction loans do not have a pre-payment penalty attached to them as they are designed to help you get the home built then once the home is completed with a certificate of occupancy you can go after traditional financing. I would check with the lender that provided you with the 5 year arm to make sure there is no pre-payment penalty. If there is one then you want to ask how long it is in place for and what is the finacial penalty to payoff early. Once you establish that you can easily transfer this loan over to a 30 year term.FYI- just keep in mind if you want to get into a 5 year arm to take advantage of a lower rate- be sure that you make additional payments towards the principal balance of the loan that way if you have to switch over to a 30 year fixed term it will offset the 5 years or less of interest that you have already spent on the loan. Every time you refinance you start the ammortization clock over again so just be careful not to become a habitual refinancer or you will never own your home free and clear. The best advice I can offer you is to find a local bank or direct lender that you trust to run a full application on your situation as it applies to your criteria. Then you should be able to get the best loan options avalible to you with differnt mortgage products and there overall benefits. Please let me know if I can be of any service to you in the future.

Picking a loan program and amortization depends on your personal goals and plans. If you are planning to live in the home for a long time and maybe payoff the loan, then you would want to avoid having to refinance and pay all the fees all over again. If you dont plan on selling in 5 years, then take a 30 year fixed. You might get a small break on the ARM, but arms are risky, and who knows where property values and interest rates will be in 5 years. Likewise, if you know that you will sell in a few years, then take the savings now, with the 5 yr arm. You would also take a look at the break even point or the cost of both loans, and the cost of refinancing in a few years. You would take the 5 year arm savings and the cost of the new loan charges. Divide the charges by the monthly savings and the solution is the number of months it will take to recover the moneys on the next loan charges. Example, you purchase a 100k home at 4.25% 5yr arm. 493 is your principle and interest payment.Where if you did a 30 year fixed at 4.625 your payment is 515. You save 22.00. Then you refi in 3 years and pay 4k in closing cost. 4k divided by 22 = 181 months or 15 years....Looking at the numbers you should be able to decide. Good luck