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Cheap mortgage money spotted
Old 04-11-2009, 07:54 PM   #1
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Cheap mortgage money spotted

ING Direct has an interesting product, the Easy Orange mortgage: ING DIRECT USA - Frequently Asked Questions

This mortgage is currently at 4.25% for 5 years. It is a biweekly payment schedule and only offered for 75% max LTV with no HELOCs. The wrinkle is that at the end of the 5 years you either have to refi, pay it off or pay $750 to lock for another 5 years. You can also float down and lock for 5 more years any time you like for $750.

It doesn't work for me given the possibility that rates could go to infinity at the end of 5 years (and I like the option of a HELOC), but it might for someone. And the rate is about as liow as I have seen for a no-point mortgage.

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Old 04-11-2009, 09:03 PM   #2
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That interest rate appears about right for a 5/1 mortgage. The only difference is that the 5/1 goes variable at the end. So the (simplistic) bet is determined on whether or not inflation lasts 7-9 years or 11+(in which case the Orange one would be better) or inflation lasts for less than 7 years(in which the 5/1 will be better).

The bet is very hard one to make because it largely depends on the actions of the federal reserve and to a lesser extent congress. My bet is that Bernanke will overshoot, but not by more than a few years. My guess is 6-10 years of high interest rates.

It doesn't really matter because the best bet is 15 or 30 year fixed.

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Old 04-12-2009, 08:57 AM   #3
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I got a HELOC for my paid off condo. I thought about getting a very small conventional mortgage so that I'd have even more cash on hand in case I need more money than my emergency stash between layoff and the start of my pot growing business in California. Then I realized that I probably don't need that much cash right away, so I went with a HELOC.
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