Or am I just an idiot? Doesn't make any sense to me.....
2006-10-11 12:12:36 · 9 answers · asked by bibliophile31 6 in Business & Finance ➔ Renting & Real Estate
Ok you're an idiot. But we all are at times. I think you will be saying duh to yourself on this. Interest only means all you pay is the interest with nothing going to the principle. However long that goes on for you still owe the entire principle amount of the loan. Now when I got a 0% cash advance on my credit card that was a bargain!
2006-10-11 12:49:42 · answer #1 · answered by gatzap 5 · 0⤊ 0⤋
Interest is all you are obligated to pay and they are the ones it is paid to. They are giving you a loan for the value of the house. They are delighted if you take a loan in which they always collect the maximum possible interest and never make payments that reduce the interest amount.
Don't forget that if you can't pay them their interest they keep your house.
In the meantime they have your interest money that they can invest elsewhere so it is a bank's favorite deal!
2006-10-11 12:15:05 · answer #2 · answered by Rich Z 7 · 3⤊ 0⤋
they make money because all you're paying them is interest...you have not reduce your principle a bit. And when you refinance, you're forced to pay the same amount that you owe since the beginning despite all the "interest only" payment you've been making. Most loans are interest only for only a certain amount of years because they start making you pay interest and principle + interest for remaining of the loan. Banks always make money, lots of money, can never outsmart and outlast them there.
2006-10-11 13:02:24 · answer #3 · answered by sarkatick 2 · 1⤊ 0⤋
In simple terms:
The interest you pay is the money the bank is making off of you. When you pay more then just the interest, you are paying off your debt in addition to paying the bank money for making you the loan.
2006-10-11 19:18:08 · answer #4 · answered by Stanley 3 · 1⤊ 0⤋
the banks get their money from the federal reserve
for up to 2%
so you figure, they charge the customer 7%
and you use the rule of 72
the rule simply states divide the interest rate into 72 and it will tell you how long it will take the money to double.
in the case of 7%, it will take under 10 years to double.
think about it, banks are always changing, always growing,growing,growing
simply put Mr. Idiot "kidding", banks get their money from the feds very cheap
and charge us the consumer what they want.
THEIR BUSINESS IS BUILT OFF INTREST.
you are no idiot, you just do not know
2006-10-13 12:15:55 · answer #5 · answered by lpittsf150 1 · 0⤊ 0⤋
don't call yourself an idiot...
the interest that you pay a bank is based on the principal balance. if the loan is an interest-only loan, the principal never gets paid down so the monthly interest payments are the highest.
the interest paid to the bank will be less and less as the principal is paid down.
2006-10-11 12:16:31 · answer #6 · answered by loveholio 5 · 3⤊ 0⤋
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2016-07-07 08:37:24 · answer #7 · answered by ? 3 · 0⤊ 0⤋
For all the people that borrow it adds up quite a bit
2006-10-11 12:14:22 · answer #8 · answered by Anonymous · 0⤊ 1⤋
what do you thing this interest go? not paying mortgage only interest for them.
2006-10-11 18:28:28 · answer #9 · answered by bianca 4 · 0⤊ 0⤋