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Tonight ABC Evening News ran a segment on 'Interest Only' home loans. Basically for a few years all you do is pay the interest on a mortgage for a few years and then you start paying your mortgage and interest. Their profile showed a scenario where the home buyer pays $1,200 per month instead of $1,600 and then when the honeymoon is over that jumps to $1,800 for a $300k house.
$1,800 for a $300k house isn't bad. That's lunch money. Taxes and water bills etc. after blows that up a might but still that's the kind of money you can make at McDonalds or something. If you live near a college and rent you're in the clear.
What the problem is is that 65% of California home owners are 'interest only' and they all assume their homes are going to grow BUT.....
Can you see the possible disastrous scenario?
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