I am in my first year of interest only mortgage...(low mon. payment).... my mortgage broker says that there is no money paying towards the principal balance....and its eating up my equity.....after 2 more years i will need to pay a huge amount of cash!! he also stated that i cannot refi* because of a penalty?
im a first time buyer... please help. thank you people
what do i do?....
2007-11-23 20:52:59 · 3 answers · asked by aydenmedia 1 in Business & Finance ➔ Renting & Real Estate
bad move!!!! You are in a negative amorization mortgage. You need to refi now! and you need to suck up the prepay penalty....can you save up the cash to pay it off? You need to contact a new broker and try and get help before you have no equity left! Some companies do 125% financing, this would be worth asking about to a new broker. Is your credit good? And can you afford a full montly payment?
2007-11-24 14:36:10 · answer #1 · answered by sweet_cowgirl19 3 · 0⤊ 0⤋
Why would you need to pay a huge sum of cash in 2 years? I am just about to re-morgage after 2 years fixed rate, interest only. I am able to do this without incurring any penalties with my existing mortgage lender. Find another broker or ask them for advice as to getting another fixed rate. You may have to pay costs but the savings per month you save by getting a better mortgage, in the long run will be bettter. Interest only mortages are ok as long as your property increases in price so that you always have the money to pay back the loan. When you can afford to change to repayment mortgage
2007-11-24 05:25:41 · answer #2 · answered by Rachel P 2 · 0⤊ 0⤋
You made a substantial error in taking this mortgage purely because it had a low monthly payment. You are paying interest ONLY, with no reduction of principal involved. Your equity may be decreasing due to reduced property value in comparison to what you paid for the property. You MAY be able to refinance, but not without paying a substantial penalty for early termination of the mortgage loan agreement.
Did you read ANY of what you agreed to BEFORE you agreed to it ?
2007-11-24 05:12:05 · answer #3 · answered by acermill 7 · 0⤊ 0⤋