Posted on: 17th Sep, 2005 02:46 am
Is an interest only mortgage a good or bad deal?
The mortgage industry does not like interest only loans. They have ended up being misused and sold to people who should not really have them.
Additionally, one must normally qualify at the fully indexed rate or some rate/payment higher than what the monthly interest only payment should be at. So, normally, if you qaulify for an interest only payment, you probably qualify for a fully amortizing payment.
The rates are usually higher for interest only loans than they are for fully amortiizing loans. Because the rate is higher, the interest only monthly payment is usually not astronomically higher than a lower rate fully amortizing payment
To say you want the lower payment now and will refinance later is not a good plan. You have no idea what rates will be when you go to refinance.
If you have a lot of equity in the house and very high credit scores and stable jobs and incomes and income increases, you could look at an interest only mortgage.
If you do not meet all that criteria, it is dangerous--looks somewhat good now, but, will probably lead to trouble later.
The safest way to do an interest only loan is 30 year fixed where the interest only period is ten years--a very long time.
The Catch 22 is that those rates are higher than a five year interest only ARM.
Rates are so low, try to get a 30 year fixed at 5.50% or lower and do not worry about the future.
If the mortgage industry--THE LENDERS--do not like interest only loans (some have cut them out entirely--ever hear of Washington Mutual who bought Wachovia who bouhgt World Savings--they are huge and do not do them anymore), what does that tell you???
We as salespeople can get you one if you qalify, the game plan has to be proper.
Additionally, one must normally qualify at the fully indexed rate or some rate/payment higher than what the monthly interest only payment should be at. So, normally, if you qaulify for an interest only payment, you probably qualify for a fully amortizing payment.
The rates are usually higher for interest only loans than they are for fully amortiizing loans. Because the rate is higher, the interest only monthly payment is usually not astronomically higher than a lower rate fully amortizing payment
To say you want the lower payment now and will refinance later is not a good plan. You have no idea what rates will be when you go to refinance.
If you have a lot of equity in the house and very high credit scores and stable jobs and incomes and income increases, you could look at an interest only mortgage.
If you do not meet all that criteria, it is dangerous--looks somewhat good now, but, will probably lead to trouble later.
The safest way to do an interest only loan is 30 year fixed where the interest only period is ten years--a very long time.
The Catch 22 is that those rates are higher than a five year interest only ARM.
Rates are so low, try to get a 30 year fixed at 5.50% or lower and do not worry about the future.
If the mortgage industry--THE LENDERS--do not like interest only loans (some have cut them out entirely--ever hear of Washington Mutual who bought Wachovia who bouhgt World Savings--they are huge and do not do them anymore), what does that tell you???
We as salespeople can get you one if you qalify, the game plan has to be proper.
If I am not making enough profit to pay my intrest free mortage can they raise the payment of the loan?
shan, your post doesn't make a whole lot of sense. "interest-free"???? that's a wonderful deal for you if it's true.
can they raise the payment? i doubt it, but then again, we don't know whether you have a fixed rate loan, a variable rate loan or a loan at all...i've never heard of an interest-free loan from a formal lender....is it your parents or siblings or someone else close who holds the note on this loan?
can they raise the payment? i doubt it, but then again, we don't know whether you have a fixed rate loan, a variable rate loan or a loan at all...i've never heard of an interest-free loan from a formal lender....is it your parents or siblings or someone else close who holds the note on this loan?
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