Tiara Posted August 25, 2003 Report Share Posted August 25, 2003 Charles ~I just have a few questions on mortgages. I was approved for a mortgage with 100% financing. I'm still waiting for the lender to send me over my pre-approval letter and to tell me what type of loan I was approved for so I may start my home shopping.My question is this. I work in the financial industry and we also do mortgages (although they are extremely hard to get from here!!) but I hear alot about the interest-only mortgages. Can you tell me more info on this.Thank you. Link to comment Share on other sites More sharing options...
amortgageman Posted August 26, 2003 Report Share Posted August 26, 2003 Most interest only loan programs require some equity in the home. There are many advantages, as well as disadvantages to interest only programs. Decent credit scores are usually required also. The most obvious is that payments are lower on a monthly basis. They are also very good if you only plan on staying in the home for 3, 5, or 7 years. They do free up alot of cash flow since you are only obligated to pay the interest portion each month. If you have the discipline to make the extra principal payments you can actually pay the loan off sooner than a conventional loan. In some situations, where the loan fits the individuals immediate and short term goals, a 5/25 interest only is a very good solution.An example I was involved in last week, was a competitive situation involving a 15 year refinance, with low $50,000 payoff. I was able to work out an interest only HELOC with a 1.99% five month intro rate, prime after that. The numbers worked out that if he went this route, and applied discipline to paying the fifteen year payment, he would actually have his home paid off in seven years instead of fifteen. The low introductory rate enables him to lower his principal by about $4000 in five short months, which puts him way ahead of the game. Link to comment Share on other sites More sharing options...
Tiara Posted August 27, 2003 Author Report Share Posted August 27, 2003 Thanks Bruce. I've heard alot about it from working here but I don't want to put any money down so I'm guessing that won't work for me. You do mortgages in Michigan? If so, I was currently approved for a mortgage but my lady is not doing anything for me. I tried to get her to fax me my pre-approval letter last week and I'm still waiting... Can just imagine what would happen if I already found the house. Link to comment Share on other sites More sharing options...
firstsource Posted August 27, 2003 Report Share Posted August 27, 2003 I think that for some states, Interest only loans are good for another reason, and that is if you are in southern CA, Mass, Parts of FL. This enables someone to buy a home, just to get into it at a decent price, and then sell it at a profit in 2-3 years. VERY RISKY, to my way of thinking, but there are people (I am not one of them) that can and do make larger payments than they have to, and for them, as Bruce said, these loan are great. Charles Link to comment Share on other sites More sharing options...
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