goldenbadger8 said:Just one thing regarding that math—did they account for the fact that the rate jumps by 0.5% in years four and five, followed by whatever the market rate happens to be from year seven through twenty? I have my doubts they actually factored that in....
Yeah, obviously this loan isn't as perfect as it looks at first glance because of those interest rates... plus, a 5-year difference in repayment is a huge deal. That’s exactly why I forced some pathetic personal banker at Chase to run the EXACT math on both options. He accounted for all the rate shifts (after year 4, then after year 6) and the principal changes... and turns out what I said above is right—I end up paying back less money overall. Obviously, the gap depends on how much you're borrowing, but for me, it works out to about $2,200 less (on a $30k loan). Plus, with the subsidized ones, there's no appraisal fee, no processing fee, and I think life insurance isn't mandatory (not totally sure, my head is spinning a bit). 🤷
There's also a third option, at least where I'm concerned (depends on the property, but I'm pretty sure all new builds these days need an energy efficiency certificate, correct me if I'm wrong)—a green loan. It has a lower interest rate than a standard one and skips the processing and appraisal fees (though I think life insurance is required). If I took that out over 15 years, the math would be similar to the subsidized one, but the monthly payment would be way too high for me to handle (even if it meant being debt-free 5 years sooner).
Anyway, maybe this helps someone.
Ugh, my head is spinning from all these numbers. 😲