serious answers only please and any testimonies would be great
2007-02-02 17:31:22 · 6 answers · asked by roach killer 2 in Business & Finance ➔ Personal Finance
interest only loans are very bad. the idea behind them is that you will live in the house for a few yrs then sell it. hopefully the value of the house has gone up so you will make a profit even though you haven't paid off any of the original amount. but if you are going to stay there for a long time or the housing market goes down then you lose money. and you will never own it outright.
2007-02-02 17:40:35 · answer #1 · answered by kipp B 3 · 0⤊ 0⤋
Interest only loans can be bad and they can be good depending on your situation and how much risk you're willing to accept.
Pro:
1. Low Payment
2. First 5 years is of a regular loan is mostly interest anyway
3. You can still pay money toward your balance if you want to
4. Your whole payment is tax deductible.
5. Easier to qualify
Con:
1. Your loan is never paid off
2. If you bought with 100% financing then your house MUST go up in value or your payment will go up and you won't be able to sell or refinance quickly.
3. They are never interest only forever. Eventually you will have to pay more money.
As for your bankruptcy, it all depends. After four years you can get a standard loan that anyone can qualify for. After two years you can get a good deal from a lot of different companies at a little bit higher of a rate, and there are even companies that will let you refinance right after a bankruptcy.
I'm, sure you have a lot of questions and i would like to be able to answer them for you. Please send me an email with your info so I can help you put together a plan.
2007-02-05 11:03:14 · answer #2 · answered by kevingeorgecampbell 2 · 0⤊ 0⤋
Are you talking about buying a property?
If you are buying a property which you plan to live in only for a few years then an interest only loan could be a good thing. You have to have a plan to repay the loan, generally some sort of savings policy with an insurance element so that in the event that you die the loan will be repaid (especially important on joint loans). That policy however is transferable from one loan to another so. You take an interest only mortgage for 25 years, in 3 years you move, you have 3 years worth of saving, you probably have some equity built up through a market rise so you can take on another mortgage for 22 years knowing the policy will pay out meaning so your mortgage will still be repaid in 25 years.
On a repayment mortgage if you moved in 3 years you would have been paying mostly interest anyway so only the tiniest amount would have come of the capital and you would have to start again with a 25 year mortgage meaning that it wouldn't be repaid for 28 years.
My husband and I have just taken and interest only mortgage to buy a house for our daughter to live in while she is at uni. It's interest only for 3 years, by which time she may well be ready to move on so we can sell it to repay the mortgage.
However if you plan to keep the property for 20 years a repayment loan is probably better, they tend to be cheaper and you will get to the point where the debt is so small that you could just pay it off.
On the bankruptcy I can't help you, never been bankrupt.
2007-02-02 22:49:06 · answer #3 · answered by gerrifriend 6 · 0⤊ 0⤋
As a loan processor that has worked for a mortage broker with 20 years experience, this was her opinon - You will be paying the interest only and not the principle, should you go to sell your home then would owe a lot more and would not get as much profit back. However, the truth is day after the discharge date, anyone can qualify for a sub-prime home loan or refinance. Getting an "A" paper, conventional loan requires 4 years after the discharge date of a BK (Chap. 7).
Rates are not as bad as one may portray them to be as well. "A" paper loans compared to sub-prime loans are about 1-2% difference in 30 year fixed rates. There are credit rebuilder programs that help one boost credit to qualify for better rates.
2007-02-02 17:42:31 · answer #4 · answered by Wondering 1 · 0⤊ 0⤋
I found this http://sivu.at/a7da article it should answer your question it has some good information on loans and getting good deals etc.
2007-02-03 11:40:26 · answer #5 · answered by Anonymous · 0⤊ 0⤋
http://bankruptcy-relief.blogspot.com has good information for dealing with a bankruptcy or trying to prevent one with alternative methods.
http://bankruptcy-relief.blogspot.com
http://loanconsolidation1.blogspot.com
2007-02-06 09:02:46 · answer #6 · answered by Anonymous · 0⤊ 0⤋