I received an email today from INGDirect touting a new mortgage product that they're offering. It's not for everyone, but for the right buyer it could be a sweet deal. The basic terms are as follows:
- 5 year loan term, with option to extend for 5 more years at then current rates
- 30 year amortization
- 25% down-payment required
- No points
- Available for loans up to $750,000
- Ridiculously low 3.524% APR interest rate!
I see this loan program as being ideal for a very specific type of borrower who fits the following criteria:
1. Capable of putting down 25%
2. Receives a bi-weekly paycheck, making the bi-weekly payment feature both an interest-saver and a budgeting convenience.
3. Plans to own the home for 5 years or less, or can pay off the mortgage in full in 5 years if necessary
For a buyer fitting these criteria, this program locks them into a very low interest rate for five years, which is as long as they plan to be paying the loan anyway. The bi-weekly payment feature also allows them to pay down principal more quickly than if they made monthly payments, which means that when they sell the home they'll have less principal to repay and will put more of the proceeds in their pocket.
As with any short-term loan, there are risks associated with this loan program. However, given that housing prices in many markets have likely hit bottom and many of today's buyers are frequent-movers that don't plan on owning their home for more than five years anyway, it is good to know that this product is out there.
More info on this loan can be found here, and if you'd like to discuss the pros and cons of various mortgage options for your personal situation feel free to give me a call or email.