Anyone that reads my blog knows that in general I am not a fan of Interest Only (IO) loans. I have said before that an IO loan is like putting your mortgage on a credit card. But on a refinance it may make sense if you have already built a lot of equity, are more interested in savings than equity building, and know you are not going to live in the property forever so have no interest in getting the mortgage paid off.
I had a client tell me recently Read the rest of this entry »
I always felt like an "Interest Only" loan (where you pay no principal and are only making the interest payments on the loan) was like taking your house and putting it on a credit card. I was never a big fan of these loans, and as a result never did many because clients always sensed my unease, and ended up going to the competition who talked these loans up as a great way to "get in the market."
I thought the Interest Only loan has been put to bed, and no one was doing them anymore. I did not think any client wanted them, nor did I think many banks offered them. But, I was surprised when an old client of mine said he was approached by a lender to refinance from his fixed rate mortgage to an Interest Only loan. Huh? Read the rest of this entry »
Do you remember when Interest Only loans were all the rage? And now I never get a phone call about them, and the only loan that anyone wants is a 30 year fixed-rate (and the occasional 5 Year ARM-fully amortizing by the way). How is it that we can dupe ourselves so easily in the middle of an investment bubble and lead ourselves to believe just about anything? Below is an old e-mail that I dug up that I wrote someone when they inquired about an Interest Only loan. I thought it was interesting. It is from 2004: Read the rest of this entry »