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Originally Posted by Sarah - GTS
In my opinion Interest only Mortgages are very risky, as you are betting that the value of the property will appreciate. What if the market drops? If you finance the majority of the property with an Interest only mortgage and the value drops you either have to hold onto the property or lose you shirt when you sell.
We do use some Interest only Mortgages, but they are short term second mortgages for small amounts (i.e. 10% of value), with very open clauses to make lump sum payments against the principal. Of course these are all rental properties, so we are investing in the income of the property vs. the appreciation and resale of the property.
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Have you ever actually heard of a property dropping in price in the last 10 years? ..maybe in Idaho or something...
Interest only is the only way to go if u are selling within 1-3 year.
if you get 30yr fixed, all you will do is pre-pay interest anyway during those first 3 years, so why pay a higher rate. just look at the "amortization schedules" for both loans and you ll see it why is it better.
3/1 I/O is 4.875% right now
30yr fixed is 5.5% (Princip./Interest)
anyway,
sarah you dont know what u talking about.
if somebody needs a loan or have any questions , feel free to check out
www.libmort.com or contact me
[email protected]
later