I have 2 properties. Im in the process of refinancing both and I was adviced by the lender who is a financial advicer also (who are refinancing now) that is better to pull out you equity and make it work on some other investment, cd etc where I can gain interest rather than let the equity be sitting without any gain. She says that when you get in a 30yrs conventional all you do is pay interest for the first 8 0r 10 yrs.
I have a lot of money on equity but I worry this type of loan may eat my equity.
2007-02-09 11:16:49 · 3 answers · asked by Juan o 1 in Business & Finance ➔ Other - Business & Finance
Yes of course it will eat into your equity. The financial advisor obviously works for the mortgage company so the higher the mortgage the higher her commission. By paying only interest you will be building negative equity in the properties and God forbid if you drain the equity from there and lose it in the stock market or somewhere else you would have to file bankruptcy and the mortgage company would seize both the properties and that is exactly what they want, your properties for pennies on the dollar.
Dont do it. The above advice is what a finacial advisor who was working for you would give you and would charge about $500 in the process. You just got that advice for free. Your welcome.
2007-02-09 11:26:07 · answer #1 · answered by Akbar B 6 · 0⤊ 0⤋
Loan Reps will ALWAYS sell you on whats profitable for them. There's a million opinions everyone will tell you. The most important on though is : What do YOU want to do with your money?? Equity is your profit. Use it wisely. It would be a mistake to pull an Equity @ 8.% and put it into a CD @ 6%, your loosing money... Do some research BEFORE you invest. There's a lot of great programs to put your money on... And that 2% Payment is good ONLY if your going to put your Equity Money to good use... Like I said do your Homework and you'' be thankfull you did!!
2007-02-09 11:53:12 · answer #2 · answered by da_system_installer 2 · 0⤊ 0⤋
HOLYCRAP I would put as much space between me and THAT planner as possible !!!
NEVER AND I MEAN NEVER IS an interest only loan in the best interest of the consumer. I know you want to believe her due to the fact that she IS THE PLANNER and you are not but I highly suggest you go with your gut here. Only YOU can make the final decision regarding your finances. Take advice from people who have nothing to gain from you and limit time spent with those trying to persuade you to spend and make THEM money !!
Just like "whole life" insurance... DON"T DO IT !!!
Good luck and tread carefully !
: )
2007-02-09 12:38:45 · answer #3 · answered by Kitty 6 · 0⤊ 0⤋