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was it a good or a bad experience

2007-10-02 17:13:51 · 6 answers · asked by danyeahill 1 in Business & Finance Renting & Real Estate

6 answers

Well when the interest only part of the loan is over, and you find out you have not paid any of the principle due on the loan, and with todays market you suddenly get hit with a high interest rate, and a home that is worth less than you owe on it, which means you cannot refinance then what. Those expounding on how great they are will be in for a surprise when it is time to pay the piper. Worst thing financially you can do.

2007-10-03 10:21:27 · answer #1 · answered by Pengy 7 · 0 0

Hi Danya,
I have three interest only loans for three seperate properties.
The reason for this is that the housing market here is very strong at the moment, therefore, the capital gains in the property is very high.
If you intend to stay in the house you are in, and the property market outlook seems flat, then it is best to pay principle and interest, otherwise you are going nowhere. If your aim is to buy, make capital gains then sell after a few years then interest only can be a very good option. It also leaves you with money available for other investments.

2007-10-03 00:25:02 · answer #2 · answered by z 3 · 0 1

If you're thinking about getting an interest only loan because you need the payments to be lower, then it should be good for you. But keep in mind you will not be paying down on the principal. It may or may not be a good plan for you depending upon your situation. I won't be able to answer this again, but for future reference, why are you considering doing interest only? You can e-mail me if you want further answers from me (as I can't come back and answer again).

2007-10-03 06:54:25 · answer #3 · answered by Shawna Marie 3 · 0 1

It is totally dependent on your situation. The advantage is that you are not committed to a large monthly payment. Disadvantage is that if you are not financially disciplined then you never pay off any of the property.

These loans are most benefitial for people with flexible income (commission) or people that have a lot of equity in the property already.

2007-10-03 00:23:21 · answer #4 · answered by John G 1 · 1 1

I have one and am glad i do. I live in cali and the market went south about 1yr ago. I bought with $0 down and paid the interest only payment for 2 yrs. Now that the market took a dive I'm happy that I'm not watching my down payment or monthly principle payment go down the drain!

2007-10-03 02:45:38 · answer #5 · answered by Anonymous · 0 2

Single best option you can go for, instead of paying down the principle use that money and equity towards a second rental income property then on the 2nd go for the 3rd etc..

Anyone that pays down a mortgage needs their head examined..

And yes I know what I am talking about, I do it for a living.

2007-10-03 01:58:59 · answer #6 · answered by Enigma 2 · 0 3

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