2007-02-26 09:15:25 · 8 answers · asked by rrh2 3 in Business & Finance ➔ Renting & Real Estate
ATTN PEOPLE WHO ANSWERED BEFORE ME:
YOU ARE IDIOTS!!!!!!!!!!!!!!!!!!!! Read a book!!!!!!!!!
Jonny: 1. Just because the minimum payment is the interest, does not mean that there is a prepayment penalty. In other words, the mortgagor is free to add a little extra each month to pay down the principal. 2. The mortgagor will build up equity- even if the prin balance is constant- if the property appreciates.
Shygirl: an IO loan is NOT the same thing as a 100% LTV loan!
Roger: I don't know where to begin trying to straighten you out. You shouldn't be allowed to manage your own money.
Mark: 1. Jumbos and IOs are NOT the same thing. 2 Jumbos and IOs are NOT illegal. 3. IOs don't necessarily have a balloon!
Here is some true information about IOs. The MINIMUM payment is interest, but in the absence of a prepayment penalty, you are free to pay as much or little as you would like on the principal. You will find that the interest rate is almost identical to a comparable amortizing mortgage all else equal (i.e. down payment, credit score, etc.). An IO is great idea for someone with volatile earnings (i.e. construction worker, waitress, real estate agent) because you have the option of making a smaller payment when times are tough, and more when you have higher income. And one final note, if you have the discipline to pay the fully amortizing payment, then, there is NO DIFFERENCE between an IO and a fully amortizing mortgage.
2007-02-26 09:44:00 · answer #1 · answered by Homer J. Simpson 6 · 0⤊ 0⤋
There are times when an interest only loan is a good option. For example, if you're buying an investment property on a Lease option or with seller financing with a 2 or 3 year call, it may make sense to keep your payments low by using an interest only loan. When the call period ends, you can refinance to a more traditional loan. We suggest you speak with a mortgage lender to understand when to and when not to use an IO loan.
2007-03-02 04:51:31 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Hell no, it balloons at the end of the term. Its just a balloon or jumbo loan, both of which were outlawed many years ago, but history always repeats itself.
Some home investors use it if they are flipping a home, but thats about it, otherwise prepare for a foreclosure, typically.
2007-02-26 09:24:47 · answer #3 · answered by Mark P. 5 · 0⤊ 0⤋
in case you're able to have the money for it, and additionally you assume to stay in it for some years, then you actual ought to do it. 25 isn't too youthful, notably including your reports. ensure you hit upon a realtor and a private loan banker you could have faith, with the "coronary heart of a instructor" as Dave Ramsey could say. Make a funds and confirm you have some thousand saved up for emergencies. once you very own a house, there isn't any landlord to call to restoration issues and pay for them. you will ought to pay for them! There are extremely some expenditures you're able to be able to ought to devise for - upkeep, upkeep, shifting fees, (at times) pest administration, trojan horse extermination, water harm, broken air conditioner, broken furnace, plumbing complications, new roof, and so forth. you do no longer ought to be in a courting to have the money for a house. i don't be attentive to why some females think of that way - it sounds stupid to me. i bought my first domicile as a unmarried mom, and that i could desire to hardly have the money for it - had to borrow money as quickly as I got here upon termite harm and had to pay massive greenbacks for pest extermination and upkeep. in spite of the undeniable fact that it became actual worth it! by using the way, you do no longer want to purchase a house with somebody with whom you're "in a courting" except that guy or woman is your considerable different. that's a actual mess in case you separate and additionally you very own a house jointly. The regulations are written for married couples putting apart; it incredibly is confusing to treatment while you're co-habitating and additionally you purchase a house jointly and later separate. reliable good fortune! wish you hit upon a tremendous domicile.
2016-12-18 11:29:29 · answer #4 · answered by balcom 3 · 0⤊ 0⤋
No, because you will never really own your home...you are just paying off interest...the principal will remain the same. You might as well rent.
2007-02-26 09:19:25 · answer #5 · answered by Johnny A 5 · 0⤊ 0⤋
Only for short term. It's ok if you are expecting a sizeable raise or if don't plan on staying in it very long.
2007-02-26 09:23:59 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Only if you are guaranteed that the housing market will go up.
2007-02-26 15:08:00 · answer #7 · answered by Quixotic 3 · 0⤊ 0⤋
I don't think so. Your best bet is to already have money saved up so you can buy a house.
2007-02-26 09:19:57 · answer #8 · answered by ♥Ms. Allison♥ 3 · 0⤊ 0⤋