Realestate Boom or Bomb-How to benefit?

[punjabigyrl]

I see the tax deduction part of it however, the car doesn't last for 30-40 years and you'll still be paying for that and not to mention another car payment rolled up in that. Also, you really don't have equity in the house where you are paying interest only loans.

 

[Chasey_Lane]

Also, you really don't have equity in the house where you are paying interest only loans.

If you pay more than just the interest payment each month you do.

 

[punjabigyrl]

Then whats the point of having an interest only loan and making the extra payments when with a regular loan you have interest and principal in it. If you get a lower interest rate with the interest only then that is fine but when that loan most of the time is not fixed the interest rate increases and then you have to refinance and pay closing costs.

 

[Chasey_Lane]

Then whats the point of having an interest only loan and making the extra payments when with a regular loan you have interest and principal in it.

What's the point of eating a cheeseburger instead of a salad? Because you have a choice. :shrug:

 

[PrepH4U]

If you pay more than just the interest payment each month you do.

Exactly just because you take out a 30/40 yr mortgage does not mean it will take that long to pay it off. Most people do include extra money directed specifically to the principal amount with their monthy payment.

 

[punjabigyrl]

It a choice to pay more money over the years......

 

[somdrenter]

There is a statistic that says 1.2 Trillion Adjustable Rate mortgages are due for first adjustment this year. Many of those include Intrest Only loans.

Nothing to see here, move along:

http://www.responsiblelending.org/issues/mortgage/reports/page.jsp?itemID=31214551
http://abcnews.go.com/Business/wireStory?id=2093736

 

[Chasey_Lane]

http://abcnews.go.com/Business/wireStory?id=2093736

"As more ARMs adjust upward and housing prices begin to dip, many Americans like Britten can't refinance and are finding themselves trapped in too-high monthly payments. For those who can't make their payments, foreclosure is the only way out."

I'd like to know why Ms. Britten "can't" refinance. If her credit is effed and no bank will touch her, that's her own mistake and has nothing to do with the type of mortgage she holds. The article makes ARM's out to be the bad guy in this case.

 

[Ponytail]

I'll probably be putting my house on the market this summer, and in the market for one of those foreclosures.

 

[barncat]

We just got a loan that is a fixed rate with the first 10 years interest only. The purchase is long-term, at least till our daughter (who's an infant now) is through school, so we were comfortable with this route and the loan does not go any higher then what our max comfort level was decided on when we started looking for a home. I've already used some of the leftover proceeds from the sale of our previous home and tax money to make 2 payments towards the principal and our plan is to make a principal payment in the amount of the mortgage every year. Plus we put 20% down when we purchased the home so we have that equity right off the back.

 

[FromTexas]

Actually, the way most interest only loans are built, you are actually adding additional debt to your loan when you think your principal should stay static. Also, they usually have a point they force you to go over to a variable rate or a traditional mortgage at whatever rate they deem. Its not interest only for 20-30 years. Most people miss the fine print.

 

[Chasey_Lane]

Its not interest only for 20-30 years. Most people miss the fine print.

Of course not. You have to refinance, usually w/in 7-10 years.

 

[FromTexas]

Of course not. You have to refinance, usually w/in 7-10 years.

And at that point most will suddenly be surprised that their original loan value has gone up and not stayed level.

 

[zimmie]

The real estate crash was a creation of the liberal media. We were due a correction, they are cyclical, and we've had one. Nothing more, nothing less.