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Posted by Jeff Strickland on June 16, 2007, 3:51 pm
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If your plan is only for 1 year, then you want a 3/1 with no prepayment
penalty and will allow Interest Only payments. If you must take a prepayment
penalty, make sure it is a Soft Prepay. With a soft prepay, you can avoid
the penalty on a sale (or any transfer for that matter), but will incur the
prepayment penalty if you refinance. You do not sound like you have any
interest in refinancing, so the soft prepay will be okay for you. You can do
whatever you want after the prepayment penalty period expires, but you have
to make your plans around the dollar amount of the penalty for the duration
of the penalty period.
As a practical matter, I'm not sure you will be able to make any money in
one year.
I'm taking a 30-yr Fixed that allows the first ten to be Interest Only. My
plan is to collect rent to cover the mortgage, and only pay the taxes and
insurance while I own the property.
> My financial standing have improved. Credit score have gone up near
> 800. I am now in a position to handle two mortgages. For investment
> purposes, would it be best to take on another mortgage with interest-
> only type of loan if you plan to sell the house in 1 year ?
>
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