Mortgage help

[akajoe87]

My situation is unique. When I was 18 my father and I built a house for me to live in. I went to college and shortly after and sold the house and cleared 60K. I build another house while in college closer to college and my father lent me another 60K so I could build another house because I could not get a loan at the time because I was a student. I graduated a few months ago and landed a job a month and a half ago. I need to get a loan to pay my father back. Since I have equity (100K worth) I dont know if I should get a home equity loan or a mortgage loan to pay him back in my situation. I contacted BB&T today and they said even with my short employment history they can get me a mortgage loan at 4.5-4.6% interest rate for 30yr fixed and I am still waiting to hear about the home equity loan. Is there a better place to get a loan? Is there any better ideas to pay my father back than this?

[Megatron]

Is your father going to let you pay him back with the equivalent of month mortgage payments with the 4.5/6% interest or he needs all the money right now? I'm not sure how your relationship is with him but I could always count on Bank of Dad to be pretty lenient if he doesn't need the money right away. You could save on all the paper works and fees of borrowing from the bank.

[akajoe87]

I agree with you. But unfortunately for me he needs it now so I need a loan. Good thinking tho and thanks for the help!

[Another Reader]

How fast can you pay it back?  Pentagon Federal Credit Union has a 5 year ARM at 2.75 percent and good rates on both equity loans and fixed rate mortgages.

https://www.penfed.org/HomePage.aspx

[akajoe87]

I would love Pay it off that quick but I need a 30 years because my income right now is 40,000/year.

[Another Reader]

If you take the 5/5 ARM, the rate is fixed at 2.75 percent for 5 years and then adjusts every 5 years.  They also have better rates on 30 year fixed rate mortgages.

[MoneyLifeandMore]

I say go with a mortgage with a fixed rate rather than a variable interest rate home equity line of credit. That way you won't be tempted to tap it for other reasons in the future and they can't cut the limit on you if the economy takes a dump.

[akajoe87]

It does seem as if a fixed mortgage rate is my best option here. Thanks guys

[Dicey]

Whoa, not so fast there, Joe!

How long do you plan on staying in the home? Unless it's more than 5-7 years, the ARM at PenFed (or similar) could still be cheaper than a fixed rate loan.