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beautyq115
New Year!
Member since 5/05 13729 total posts
Name:
Me
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Any one have an interest only mortgage???
Just looking for some opinions...thanks
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Posted 10/15/07 9:45 PM  |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Any one have an interest only mortgage???
i dont....
but if you are looking at one, i recommend asking yourself if you can afford the house you want without one.
if you can't, dont get one!
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| Posted 10/15/07 9:47 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: Any one have an interest only mortgage???
We have an interest only mortgage with a 10 year lock. I hope to sell it in a few years. It's the condo in AZ, not our main home.
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| Posted 10/15/07 9:47 PM |
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beautyq115
New Year!
Member since 5/05 13729 total posts
Name:
Me
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Re: Any one have an interest only mortgage???
The payments are less expensive but I really don't like the idea of it...
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| Posted 10/15/07 9:54 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Any one have an interest only mortgage???
unless you are in a sales or comission job- where you don't make the same amount of money everything month- I would stick to a 30 year fixed
the only reason why I would even consider one- is first- that this is what my DH does for a living- and second- being that he is a mortgage banker- his monthly take home varies - so on a bad month- it would be nice to have the smaller payment flexiblity and on a good month- I would pay extra
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| Posted 10/15/07 10:19 PM |
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beautyq115
New Year!
Member since 5/05 13729 total posts
Name:
Me
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Re: Any one have an interest only mortgage???
Posted by Beth1210
unless you are in a sales or comission job- where you don't make the same amount of money everything month- I would stick to a 30 year fixed
the only reason why I would even consider one- is first- that this is what my DH does for a living- and second- being that he is a mortgage banker- his monthly take home varies - so on a bad month- it would be nice to have the smaller payment flexiblity and on a good month- I would pay extra
Thanks...makes sense
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| Posted 10/15/07 10:31 PM |
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sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
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Re: Any one have an interest only mortgage???
I don't but I know a couple of people that do, they didn't really fit the criteria for I/O's & now regret it.
Here's a couple of good links
http://www.federalreserve.gov/pubs/mortgage_interestonly/
http://www.bankrate.com/brm/news/mtg/20020620b.asp
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| Posted 10/16/07 6:20 AM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Any one have an interest only mortgage???
Posted by Meaghan729
i dont....
but if you are looking at one, i recommend asking yourself if you can afford the house you want without one.
if you can't, dont get one!
It seems to me that you still need to be able to afford the house anyway. Your payments for the first 5-10 years really won't be THAT much lower than they would be with a regular mortgage. Most of your mortgage payments for the first many years are mostly interest, aren't they?
It's for that reason I don't entirely see the point. You don't save that much money, so you might as well pay dowm SOME of the principal... but maybe I'm missing something.
Message edited 10/16/2007 8:07:43 AM.
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| Posted 10/16/07 8:06 AM |
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ali120206
2 Boys
Member since 7/06 17795 total posts
Name:
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Re: Any one have an interest only mortgage???
Posted by Kara
Posted by Meaghan729
i dont....
but if you are looking at one, i recommend asking yourself if you can afford the house you want without one.
if you can't, dont get one!
It seems to me that you still need to be able to afford the house anyway. Your payments for the first 5-10 years really won't be THAT much lower than they would be with a regular mortgage. Most of your mortgage payments for the first many years are mostly interest, aren't they?
It's for that reason I don't entirely see the point. You don't save that much money, so you might as well pay dowm SOME of the principal... but maybe I'm missing something.
You could save a decent amount each month in the beginning since the interest rate on the I/O tends to be lower for a certain period of time - we'd be paying about $400 less per month if we opted with the I/O as opposed to the 30 year fixed. Obviously, this changes after the set period of time the rate is locked for.
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| Posted 10/16/07 8:25 AM |
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VickiC
Rocking the party
Member since 5/05 4937 total posts
Name:
Vicki
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Re: Any one have an interest only mortgage???
Posted by ali120206
Posted by Kara
Posted by Meaghan729
i dont....
but if you are looking at one, i recommend asking yourself if you can afford the house you want without one.
if you can't, dont get one!
It seems to me that you still need to be able to afford the house anyway. Your payments for the first 5-10 years really won't be THAT much lower than they would be with a regular mortgage. Most of your mortgage payments for the first many years are mostly interest, aren't they?
It's for that reason I don't entirely see the point. You don't save that much money, so you might as well pay dowm SOME of the principal... but maybe I'm missing something.
You could save a decent amount each month in the beginning since the interest rate on the I/O tends to be lower for a certain period of time - we'd be paying about $400 less per month if we opted with the I/O as opposed to the 30 year fixed. Obviously, this changes after the set period of time the rate is locked for.
Also, from other articles I'v eread about IO, you need to be sure that you are paying all the interest. Some companies are giving a set amount that doesn't cover all the interst, so it's like adding to your principle.
Personally, I wouldn't do an IO loan. They scare me!
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| Posted 10/16/07 8:29 AM |
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SweetTooth
I'm a tired mommy!
Member since 12/05 20105 total posts
Name:
Lauren
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Re: Any one have an interest only mortgage???
We do not, but we thougth about it. It would not have saved us much money and our mortgage broker really recommened against it. I am glad we didn't, I like knowing that it is fixed - nothing will ever change about it.
I agree with what a pp poster said - if you can't afford the whole payment now, then its not a good idea. We all HOPE that we will be making more money in 3, 5, 10 years when the I/O would expire, but you never really know what will happen.
ALSO, with an IO you are not really gaining any equity because you're not paying down any of the prinicpal.
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| Posted 10/16/07 8:37 AM |
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greenfreak
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Member since 9/06 11483 total posts
Name:
greenfreak
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Re: Any one have an interest only mortgage???
DH and I are textbook best-case scenarios for an IO mortgage, which is why we chose it. Here's why:
1. We CAN afford to pay interest + principle, if it wasn't an IO.
2. We do intend on selling this house within 10 years, before the mortgage changes from IO to I+P.
3. We are extremely anal about paying our bills and keeping in good standing with our payments and funds. It takes a diligent person to not count on the IO payment, ignoring the 11th year jump.
4. We DO intend on paying towards the principle and will not be penalized for doing so before we sell the house and when we pay off the mortgage.
5. We went with this mortgage only to have flexibility with our first home, and should we find ourselves short on funds one month here and there. Like Christmas time.
6. We have two major debts (my car and his school loan) that will be paid off within 2 years. Even if we had to pay the IO for 2 years, we could take the other thousand dollars a month we pay to the other bills and put it towards the mortgage.
7. The interest rate will not change for the life of the mortgage - 30 years. There is no 11th year adjustable rate.
8. DH's salary increases are in the form of once or twice yearly bonuses. So he gets a lump sum at one time that can be put towards the mortgage, into the house, into savings, whatever.
When it was first mentioned, we were scared too. But the few things that you have to be worried about - namely, penalties for early payoff and a variable rate - are not factors for our product.
I will say that if we could not afford the full interest + principle payment, we wouldn't be doing it. We just like the flexibility that the IO provides, if we move in and suddenly find we have to buy a big ticket item. Call it a safety net. 
Feel free to FM me if you want to talk about it some more.
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| Posted 10/16/07 10:29 AM |
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Re: Any one have an interest only mortgage???
We have a 30yr fixed rate with a 10 yr interest only....but we pay our mortgage each month as if it wasnt interest only so we are putting an extra $500 toward the principal....the reason we did this is because we wanted the option of the lower payment in case we had a bad month (my husband works in construction) but so far so good and since april we have paid 2k off the principal.....and even after the 10 years our rate will never go up..... and no penalty for paying off mortgage
Message edited 10/16/2007 11:27:37 AM.
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| Posted 10/16/07 11:26 AM |
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MrsRbk
<3 <3 <3 <3
Member since 1/06 19197 total posts
Name:
Michelle
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Re: Any one have an interest only mortgage???
Posted by greenfreak
DH and I are textbook best-case scenarios for an IO mortgage, which is why we chose it. Here's why:
1. We CAN afford to pay interest + principle, if it wasn't an IO.
2. We do intend on selling this house within 10 years, before the mortgage changes from IO to I+P.
3. We are extremely anal about paying our bills and keeping in good standing with our payments and funds. It takes a diligent person to not count on the IO payment, ignoring the 11th year jump.
4. We DO intend on paying towards the principle and will not be penalized for doing so before we sell the house and when we pay off the mortgage.
5. We went with this mortgage only to have flexibility with our first home, and should we find ourselves short on funds one month here and there. Like Christmas time.
6. We have two major debts (my car and his school loan) that will be paid off within 2 years. Even if we had to pay the IO for 2 years, we could take the other thousand dollars a month we pay to the other bills and put it towards the mortgage.
7. The interest rate will not change for the life of the mortgage - 30 years. There is no 11th year adjustable rate.
8. DH's salary increases are in the form of once or twice yearly bonuses. So he gets a lump sum at one time that can be put towards the mortgage, into the house, into savings, whatever.
When it was first mentioned, we were scared too. But the few things that you have to be worried about - namely, penalties for early payoff and a variable rate - are not factors for our product.
I will say that if we could not afford the full interest + principle payment, we wouldn't be doing it. We just like the flexibility that the IO provides, if we move in and suddenly find we have to buy a big ticket item. Call it a safety net.
Feel free to FM me if you want to talk about it some more.
We also have an IO for many of the same reasons listed here. Although we do not intend on selling, the intention is to have the entire mortgage paid off before 7 years (we have a 7 year fixed interest). We pay a large amount to the principle each month as well. By the looks of things we could have the house paid off in less than 3 years (we're there 2 years now).
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| Posted 10/16/07 11:48 AM |
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antoinette
boy mamma
Member since 5/05 2975 total posts
Name:
Antoinette
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Re: Any one have an interest only mortgage???
we have and 30 yr io fixed for 10 yrs- this is our starter home and there is no way im linving in this house for 10 yrs. We've been in it less than an year and we are already fixing it up to sell when the market comes up. We have plans to move out of state and they are pretty solid as of now.
The mortgage works for us right now if now we have 10 yrs to worry about either selling or worse comes to worse we refi. I couldnt see any reason to not do it.
Message edited 10/16/2007 12:57:08 PM.
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| Posted 10/16/07 12:55 PM |
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cjik
Welcome 2010!
Member since 2/06 8879 total posts
Name:
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Re: Any one have an interest only mortgage???
I looked into this, but it didn't make sense for us since we both earn steady incomes, and we plan to stay in our house for quite some time. If you plan to flip or sell relatively quickly, or if you earn a less steady income, the interest only mortgage could be good for you.
Just be very careful about the terms--make sure you know how long you can go until the principal is due, and if those payments will be balloon payments or not. Also, as long as you are not paying principal, you are not earning equity, plus you'll owe a lot in time, so you really need to work a process for paying the principal into your payment schedule, otherwise you can really be hit hard when your interest-only option expires.
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| Posted 10/16/07 4:48 PM |
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