Does anyone offer a 5 year mortgage? (1 Viewer)

[Marvin]

Fixed or adjustable, amortized over 5 years.

I know you can pay off a 15 year mortgage early but I'd assume a 5 year loan would have a lower rate. So far I haven't seen any for under 10 years.

 

[Ryan Wright]

You can get them at any timeframe you want. Go into a bank and talk to a loan officer or a manager.

My friend's parents had a 1 year mortgage for ~300k. They built a new house but didn't quite have enough money to pay cash, and so decided to stretch it out over a year.

 

[Kevin P]

If you can pay a house off in 5 years I'd wait 5 years and then pay cash for a house! If the real estate market "bubble" bursts by then you might even save some big bucks...

Many folks can't even pay off a car in 5 years...

KJP

 

[ChuckSn]

I can't speak for every lender out there, but where i am at you only get a rate break at 20years and 15years on our conventional mortgages.

 

[Shawn McBride]

Even if you get a full 1% rate discount (which you most likely can't) on the 5yr loan, going from a 5yr loan to the 15 yr loan with overpayments equivilant to the 5r note wouldn't make much difference. Maybe one or two extra payments beyond five years. And if you have the means to pay off a mortgage in 5 years you wouldn't even notice that. Plus with the 15 yr payment plan you have the option of smaller notes should you get into a bind.

Check out the mortgage calculators over at bankrate.com to see what I'm talking about.

 

[Marvin]

Thanks for the responses. For sake of argument, assume this is for a refinance. I assume any bank could arrange for a 5 year term, most likely through extra payments but at the 15 year rate. I was wondering if there was a much lower 5 year rate, considering that a 15 year rate is lower than a 30 year rate. So far, no bank I've checked has one.

 

[ChuckSn]

You may want to look into a 5/1 ARM. The rate stays fixed for 5yrs then becomes variable after that. Those rates are generally lower than your fixed rates. Your payment may be based on a longer term than 5 years, but you would get a rate lower than a conventional fixed.

 

[Ashley Seymour]

A lot of factors are at work here, not just the short term. Banks and mortgage brokers probably don't have 5 year loans because so few people could afford them, so there is no market for them. Market meaning the investor that the bank sells the loan to. A S&L that portfolios their own loans may be an option, but even here the bean counters upstairs have to analyze the asset risk and income potential and it might cost more to do this analysis than for the vanilla 30 year mortgages.

Banks will also have to qualify the borrower based on the debt to income ratio. A $100,000 loan at 6% amortized for five years would have a payment of $1,933.28 per month and require an income of $7,733 per month.

I know people who are not reinvesting their CD's because of the low rate. The rate break on a 5 year loan to a 10 year loan would not be great anyway and over the course of the loan would not amount to much. At least to someone making over $7,733 per month.