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Thread: Home Financing questions?

  1. #11
    rivercrazy
    IMO - interest only loans are a scam and will hurt the real estate market down the road. They are simply a tool used by financial institutions to help people qualify for loans that they cannot possibly handle........
    When prices moderate which WILL happen at some point (its a normal cyclical thing) upon maturity the appraised values will not support some of today's purchase prices. Some peeps will be underwater and the lender at that time will put the screws to you. They will be in the drivers seat at that point on everything.
    RUN FOR COVER ON INTEREST ONLY DEALS..........

  2. #12
    tamalewagon
    Exactly! Hurry rates are creeping up.
    Actually that's wrong (not calling you out wantacat, just stating fact)...the rates have dipped again as the 10-year bond has gone below the 4.15% area again. But you are right to state they should get a move on. But then, I'm just a mortgage broker so what do I know?
    Home equity lines of credit will soon be non tax deductable as the mortgage insurance industry is finally having their way. Beware.

  3. #13
    Cole
    Why in the world would you think I/Os or interest only loans are a scam?
    Have you ever looked at what you pay in principal for the first 5 years with a standard 30 yr loan...
    interest only is a great way to go and gives you the flexability to pay more towards principal if you like!
    Also I really like the 1% programs when you have the equity.

  4. #14
    Rock-A-Bye-Baby
    i agree with cdogg..
    a 10 year interest only loan is a great option. and he's right, you will move within the span of the loan. there is one solid piece of advice that i follow and that is that interest only loans are good, but can be exceptional if you put the tax savings back towards your loan thus paying down the principle. if you consider a couple of hundred bucks extra a month, it makes a big difference in the end. and along the way, you never know what might happen with interest rates.. you could re-fi at any time and lock in a 30 year fixed. additionally, you should consider the home equity line of credit as soon as you can. you can get one a week after escrow closes on your new home.

  5. #15
    rivercrazy
    The VAST MAJORITY of those choosing interest only loans do so only because they cannot afford a loan with amortization. That is selling a product to someone that is likey to hurt them down the road.
    Most interest only loans have an intermediate maturity date, not 15 to 30 years. At the end of the 5 or 7 year period the piper might be there to make your life a living hell.....
    Perhaps its a good product for an investor who is willing to stomach more than normal risk. However, most people need a roof over their heads and risking the single most important and fundamental investment is not generally a wise idea........
    Just my humble opinion.....

  6. #16
    totenhosen
    I'll agree with what Mandelon said. If you want hit me up and I can help you out with the loan as well as finding a place.

  7. #17
    Cole
    The person by all means has to know his goals with his property...does he plan on staying there FOREVER, if so he may want to consider 30,20 or even a 10 yr fixed.
    Is this an investment property where "cash flow" may be an issue, an I/O or 1% might be right for you.
    There are so many factors when structuring a loan ....everyone is different.

  8. #18
    Dave C
    an opinion but a good one at that!!
    The VAST MAJORITY of those choosing interest only loans do so only because they cannot afford a loan with amortization. That is selling a product to someone that is likey to hurt them down the road.
    Most interest only loans have an intermediate maturity date, not 15 to 30 years. At the end of the 5 or 7 year period the piper might be there to make your life a living hell.....
    Perhaps its a good product for an investor who is willing to stomach more than normal risk. However, most people need a roof over their heads and risking the single most important and fundamental investment is not generally a wise idea........
    Just my humble opinion.....

  9. #19
    welk2party
    I have been following this thread and I was not going to post anything, but I am changing my mind so I can put in my two cents. People have there opinions on what is best and that is great. What I feel compelled to say, which others have touched on, is that it is crazy to generalize a particular loan product as bad or good. As has been said before, everyones situation is different. Stat say that we Americans refinance our homes on average every 4 years. There are so many factors to choosing a loan that is right for you. Can you honestly say to yourself that once you get a 30 year mortgage you will NEVER refinance because your goal is to pay it off? For most the answer is no if they are being honest. Does this mean you should not get a 30 year fixed? I don't know. Again it would depend on your situation. For most homeowners, tapping your equity is the only answer for major repairs or maintenance on their homes. How many people can write a check for a new roof or remodel a kitchen or bath? From my experience, very few. This of course is a function of poor financial practices and income not keeping pace with the rising costs of EVERYTHING! No one can predict the future, but we can certainly make educated guesses. All these "crazy" loan programs have both benefited and hurt the real estate market. More people became homeowners then ever, and current homeowners saw amazing appreciation. This in turn created more demand and inflated prices to stupid levels. The market will correct itself and unfortunately some people will be hurt. By in lage, my feeling is that most will make it through and find a way. Remember, most of the short term fixed loans have annual and lifetime caps on the rates unlike most of the loans in the 80's! The lender has a vested interest in writing loans that people can pay. They are not in the business of owning homes. Also, increased equity is nothing more than increased leverage.
    Sorry for the ramble....NUFF SAID!

  10. #20
    Luscious
    Hi there,
    As a Realtor in the business for the last 14 years... I can't begin to tell you how many people that couldn't buy houses 4-5 years ago, now CAN!! These loans are the most attractive loans and right now I work with a lender that offers what they call a "Pick-a -Payment" option on your loan. This type of loan has 4 options to it you can have either a neg. arm payment, an interest only payment, a fixed rate payment for 30 years or a fixed rate payment for 15 years. You choose based on your situation if your situation changes "every month" this loan will "accomodate you" every month. I don't like the idea of having to pay a higher payment just because it is a fixed rate. WHy not take advantage of the lower rates, everyone else does. I'll tell you without these loans, we would not have the market that we do right now. It's all about the supply and demand law. The demand is definitely there,but without the availabilty of the houses that is when the rates jump. The opportunity is there for "ANYONE"to buy a house, good credit, bad credit, every situation is different. If anyone would like some more info please PM me or call me on my cell at 951-264-5257. I would love to be given the opportunity to sit down with you and discuss your options. The market?...I don't think it is going to take a dump...not now not in the future. These loans are really the buyer's responsibility. ANy loan is as good as you discipline yourself to it. For me, these loans have worked for me.Just PM me or post your ideas or questions and I will respond to the best of my ability. Make sure when you work with a Loan agent that you ask about the prepayment penalty. All you need is someone who will disclose this to you and as long as you are aware of it (again, based on your financial situation) you should be fine.
    Thanks, and if you are interested in Buying or Selling give ME a call. I make "House Calls!"

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