Long Term, Interest Only Mortgages?

meat ain't moving.....he'd be a fool...he lives on golden property...hell it's better than gold....

so saving the principle for 10 years and reinvesting it may work for him......most of us smucks don't have the luxury of knowing a 10 year forcast on the area....hell 10 years ago ballantyne was gold...then pulte and portrait homes shittied up the water with affordable housing....

that's my worry about the 10 year plan.

 

Is it more difficult to qualify for the IO loan and what happens after 10 years? You refinance the sales price?

 

I forgot - but it's not much more than that. I'm just investing alot more in anticipation of a possible payoff.

The key for me - like Freakshow said - was the 10 year. I've done 2 things for 10 years - be married, stay clean.

I've already been here in my house for 6 - and I'm on my 4th mortgage ( LOL ). When i bought in 2000 rates were 8 7/8%. 30 year fixed.

PLus - something must have been different about the base for IO loans a year ago - mine was less than a 30 year fixed. Freakshow - is it based on LIBOR?

Whatever - the Jumbo fixed 1 year ago was just at or under 6%, and the 10 year INT only was 5 1/8. I don't think I'd have done INT only if it was a higher rate than 30 year fixed.

I also did not choose INT only because I couldn't afford a different type - I think that would be very unwise.

Let's face it - 5.125% tax deductible rate is like free money. I think I could almost borrow at that rate and put it in an 18 month CD and come out ahead - deducting straight off the top and paying LT gains on the 18 months. It's stoopid.

 

That's interesting. More and more I'm knowing real estate, long term, is only about the dirt. Everything on top of the dirt is an expense.

I'm still tripping about the house around the corner to be dozed at $725k. If I move in 9 years, my house will be demolished. I almost think it would be demolished today. Very close.

 

Next time put this into words that most here can understand. For example....

If you are buying a mobile home that's worth 3,000 and you ain't putting down anything (cause you is buying it from your ex-BIL's first cousin) and you ain't planning on paying lot rent cause you're gonna park it in your daddy's back yard....and your welfare check is......

 

May be a bit tougher...but there are ways to get most qualified. This is usually seen in the rate.

And the PURCHASE price isn't part of the equation in a refinance. It's the payoff amount and the value of the home...

Let's say you bought a home for 100,000 and got 1 loan at 7% interest only...using these numbers for simplicity...You'd have a monthly payment of $583. Of course you'd have a huge PMI payment for having over 80% LTV (Loan to Value)...but that's another story...You refinance 4 years later...you'd be refinancing what you borrowed minus any principle. Say you paid NO principle. You'd owe the $100,000...but now your home is worth $120,000. You'd be borrowing at 83% LTV. This will give you a better rate than a 100% (of course rates could be anywhere in 4 years) AND your PMI payment will be MUCH lower.

One thing...refi's can cost $2000-$5000...even more...so you'd need to take that into consideration. You'd probably be borrowing $102,500 or so on the new loan...you'd owe MORE...but you have $17,500 in equity...without paying any principal. Hopefully you've been using the savings to bet on Gamecock games and have gotten rich...

 

Over 10 years, I don't see how Ballantine or uptown could lose. They may or may not stay hot the whole time, but they're going to appreciate. I don't know of many places that are going to lose any money or not beat bank interest over 10 years, but if any of you have any horror stories, tell me. I'm seriously thinking about an uptown condo.

 

Condos tend to appreciate less in hot markets and get hit harder in soft markets.

This may not be true uptown, though.

 

Uptown condos look good now. I'm a LITTLE concerned at the amount being built...still think they'll be good invesments. Guy in my office has bought 3 shitters in Dilworth and bulldozed them. Building new homes...thinks he'll make $75,000 per deal.

CHEAP homes can have problems. I've run into people that bought a home for say $90,000. Problem with these neighborhoods...foreclosure rates tend to run higher. This pulls down the value in the whole neighborhood. Have had to deal with some PISSED off people. I remember one guy had busted his ass in his yard and upgrading his home. He was furious that SIX people on his street had gone into foreclosure...those home sales crushed his home's value.

 

A realtor that send me a lot of business is having this problem with a condo he bought in Mid-Town Atlanta (builder and Fred...you'd like this guy). He said the crazy amount of building has hurt him. His condo is on the market for $5000 less than he paid 4 years ago.