| Interest Only Mortgage Loans |
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Lambert
Contributing Member
Cash: $ 5.65
Posts: 28
Joined: 29 Aug 2005
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quote:
Originally posted by Rolo
That is most certainly true. However, I will throw this out there: "Complex is not, not simple".
You make some very good points.
I guess the final conclusion would be that you be sure that you (1) educate yourself as much as an ordinary guy can and (2) be sure you work with is honest and able to put that annoying financial professional language into plain english. 
As for the cars at employee cost. I prefer to buy used cars ... with cash. Let the folks with more money pay for that initial depreciation and breaking them in for me and hassle with all those payments. I prefer to actually "own" what I call mine.
Curious question about the home financing. What loan is best for someone who hates debt and wants to get the house payed off ASAP and pay less money in interest? Who doesn't care about equity because they never plan to sell the house or borrow against it?
marC
Because the Law of Gravity Doesn't Apply to Credit Card Balances!
www.ExperiencingFreedom.com
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Fri Sep 09, 2005 1:23 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by Lambert
I guess the final conclusion would be that you be sure that you (1) educate yourself as much as an ordinary guy can and (2) be sure you work with is honest and able to put that annoying financial professional language into plain english.
Most definitely! And that is with anything and everything. Unfortunately, many prey on the ignorant, in any business.
quote:
Originally posted by Lambert
As for the cars at employee cost. I prefer to buy used cars ... with cash. Let the folks with more money pay for that initial depreciation and breaking them in for me and hassle with all those payments.
That is a valid point. Many cars today, however, hold their value much better; I do not know how relevant that point is today as it was ten years ago. A two-year old car was, financially, the ideal to buy.
As a DIY mechanic, I do not want to inherit others' problems, and you'll never know what they are until something goes wrong. Reliability is essential for me. Also, when driving styles change on a car, it reeks havoc on it. Because of the way I drive, I'll destroy your typical car because I'm forcing it to wear differently. Its like forcing a Couch Potatoe (the 'e' 'cos I'm Republican  ) to run three miles as quickly as possible.
I've done this to a reliable Japanese car I bought for $10 (it just needed an alternator). It had a flawless mechanical record (I knew the guy and he kept all paperwork). He drove almost like Mr. Magoo. I trashed the rod bearings in 2 years. It was a very economical move on my part, though. I even got $150 for the car!
quote:
Originally posted by Lambert
I prefer to actually "own" what I call mine.
"own" in quotes, yes. Loan or not, you still actually own it.
quote:
Originally posted by Lambert
What loan is best for someone who hates debt and wants to get the house payed off ASAP and pay less money in interest? Who doesn't care about equity because they never plan to sell the house or borrow against it?
The same loan that applies to anyone who doesn't suffer from emotional hangups.
Never, EVER, NEVER make financial decisions based on emotion. Rather than let one's thinking continue to be an impediment, work to change his thinking. Understanding how money works and the interplay of all these things is important, and liberating.
"Expect me when you see me."
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Fri Sep 09, 2005 2:09 pm |
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Ellis
Member
Cash: $ 3.00
Posts: 15
Joined: 23 Aug 2005
Location: Washington State
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| Re: Interest Only Mortgage Loans |
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quote:
Originally posted by Nikita771
Does anyone have any personal experience with one of these loans?
I personally have a IO on my home. Interest only loans are not fishy as some of the posters believe. It is a great tool when used correctly, however in order to use any tool, one must educate themselves as to when to use it to thier advantage and how to minimize the cons of the program.
Also knowing when to utilze such a loan is also a must.
I believe people who arent too financially or real estate savvy should stay way from it as they are getting it without much knowledge but if you are a more savvy consumer or investor, Interest only loans can pay off huge profits especially mixed in with other knowledge.
I personally made over $110K on equity due to appreciation on my new home which i had for only 1yr so far while doing a no down payment and interest only loan. This means I got the best leverage possible for the 3yrs I plan to keep this house. Next year I plan to take out my equity w/ a refi to pay off my higher interest debt (credit cards).
There is also another side to this topic which is to save money by paying off the loan as fast as possible, which can save you alot of money. However most people dont stay in a home for the full 30years or even 15 for that matter. That is why the 10 year bench mark is used. Personally I believe its more like 5yrs-8yrs that a home will be occupied by the same owner.
However I personally dont like this approach since you are only making money on one property while by leveraging, you can actaully make more money and control more asset.
So if your conservative and not willing to educate yourself, use the nest egg approach and try to pay off your mortgage faster, you should consult a financial planner who can show you how much money you can acgtaully save by just making even 100 dollars to your montly payment or doing bi-weekly and other such programs or custom designs of your own making.
If you are savvy and are willing to take some risk, then using leverage is the best way to go and can make some people fortunes or atleast very well off compared to the nest egg approach taken consumers.
Hope that helps. Also read up on finincial news, ideas, via mag, web, or books. I personally like reading news to stay current but school books from colleges to develope basic groundwork and also investing in unofficial education that also shows you beyond what textbooks contain.
If you have any mortgage questions
or need help with a loan you can contact me at: EllisJackson@rhmbanker.com
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Sat Sep 10, 2005 12:36 pm |
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bong12187
Preferred Member
Cash: $ 24.50
Posts: 120
Joined: 31 Jul 2005
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| Re: Interest Only Mortgage Loans |
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Like any other loan IO is dangerous. However, with proper education, you can do alot with it to increase your net worth and returns. I was just in Hawaii a month ago and met with an old friend. He just bought a 450K house using IO. He will be there for 6 years and will definitely be moving back to the mainland after that. With property tax and insurance and his monthly payment goes up to $3000 a month. Is this a wise investment? Definitely. He is a doctor in the Army doing his fellowship there for 6 years. Army will pay for his home while at the same time he will get tax deduction for depreciation, interest payment, and also receive appreciation. The house he bought needed alot of repair but it is in an area where 550-650k house range is average. There is also a good possibility that an aircraft carrier will be stationed permanently in Hawaii as well as their support ships (Guam is the only other option and they don't have the infrastructure to receive 5k sailors +10k dependents). This is an example on how you can minimize the danger of any loans to include IO. Knowledge of real estate, taxation, and your surrounding will definitely decreases any negative part of investing in real estate.
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Sun Sep 11, 2005 4:25 am |
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