i know its been asked before, but 40 year mortgages

any feedback?

Re: i know its been asked before, but 40 year mortgages

Bad move. Too much interest being paid, for very little relief on monthly payment.

Falls into the same category of Interest-Only loans.

Re: i know its been asked before, but 40 year mortgages

---

Posted by DjPiLL

Bad move. Too much interest being paid, for very little relief on monthly payment.

Falls into the same category of Interest-Only loans.

---

i agree w/ the 40 yr but i TOTALLY disagree w/ the interest only. IMO it is pointless to pay towards equity. house will (hopefully appreciate) regardless of amount in equity. i would rather invest the 'equity' money at a higher rate of return. as a result we will

1 - earn interest on the investment
2 - deduct the mortgage interest
3 - make money on appreciated value

IMO, it is a NO brainer

we also have a no pre-payment penalty if we do decide to pay towards equity.

Re: i know its been asked before, but 40 year mortgages

---

Posted by skew

IMO it is pointless to pay towards equity. house will (hopefully appreciate) regardless of amount in equity. i would rather invest the 'equity' money at a higher rate of return. as a result we will

1 - earn interest on the investment
2 - deduct the mortgage interest
3 - make money on appreciated value

IMO, it is a NO brainer

we also have a no pre-payment penalty if we do decide to pay towards equity.

---

And what guarantee do you have that the house will DEFINITELY appreciate? No guarantee really. What if the interest rates shoot up to 8% by the end of the year. Think your house will continue to appreciate?

What if you get divorced six months after buying the house and are forced to sell. You will be losing money.


Neither loan is smart... but IMO an interest free loan is the worst choice you can make.

Frankly... if you can't afford the payments on a 30yr fixed... you are buying OUT OF YOUR LEAGUE and need to look for something cheaper.

The only time an interest only loan makes sense is perhaps for an investment secondary property.

Re: i know its been asked before, but 40 year mortgages

---

Posted by DjPiLL

---

Posted by skew

IMO it is pointless to pay towards equity. house will (hopefully appreciate) regardless of amount in equity. i would rather invest the 'equity' money at a higher rate of return. as a result we will

1 - earn interest on the investment
2 - deduct the mortgage interest
3 - make money on appreciated value

IMO, it is a NO brainer

we also have a no pre-payment penalty if we do decide to pay towards equity.

---

And what guarantee do you have that the house will DEFINITELY appreciate? No guarantee really. What if the interest rates shoot up to 8% by the end of the year. Think your house will continue to appreciate?

What if you get divorced six months after buying the house and are forced to sell. You will be losing money.


Neither loan is smart... but IMO an interest free loan is the worst choice you can make.

Frankly... if you can't afford the payments on a 30yr fixed... you are buying OUT OF YOUR LEAGUE and need to look for something cheaper.

The only time an interest only loan makes sense is perhaps for an investment secondary property.

---

You seem to give a lot of advice on here (and I have no idea of your credentials), but I also COMPLETELY DISAGREE with you about the IO loan. You are very ignorantly lumping people into the same category.

Our loan of choice was an IO-ARM that we can pay down principal in any amount, at any time, but we are only required to make IO payments. My husband owns a successful company, and his income fluctuates as a business owner. EVEN THOUGH WE CAN AFFORD IT, in a house that we will not live in forever, why on earth would we bog ourselves down with the fixed payment of a traditional 30-year fixed loan, when THE FIRST SEVERAL YEARS OF A 30 YEAR FIXED LOAN IS MOSTLY INTEREST ANYWAY ???

What we are doing is almost the exact same thing, except the ARM gives us a lower rate, and every time we pay down principal, it reflects in our monthly payments!!!

So please stop giving your expert advice without knowing the whole deal.

Re: i know its been asked before, but 40 year mortgages

---

Posted by ThongLori

You seem to give a lot of advice on here (and I have no idea of your credentials), You are very ignorantly lumping people into the same category.

---

Excuse me? So my comments are considered ignorant... but you can say what you feel because yor husband owns a sucessful company? Take a hint CurlieGirl.... that doesn't make you an expert on the subject either.

I never said interest only loans were for everybody if you would have read what I posted above.

But people seem to get caught up in 'monthly payment syndrone'. They look at a 30yr payment... then they look at an interest only payment and think they can stretch themselves out to afford the IO loan payment. Bad move.

Here are some benefits on when an IO loan may be beneficial.

http://ezinearticles.com/?Interest-Only-Home-Loan---Is-It-Right-For-You?&id=24001

Notice your situation is listed. So it may be right FOR YOU. But its not right FOR MOST.


And I will stand by my point and say if the reason for somebody getting an interest only loan is because they can't afford a 30yr payment... thats a BAD move.

Re: i know its been asked before, but 40 year mortgages

---

Posted by DjPiLL

---

Posted by ThongLori

You seem to give a lot of advice on here (and I have no idea of your credentials), You are very ignorantly lumping people into the same category.

---

Excuse me? So my comments are considered ignorant... but you can say what you feel because yor husband owns a sucessful company? Take a hint CurlieGirl.... that doesn't make you an expert on the subject either.

I never said interest only loans were for everybody if you would have read what I posted above.

And I will stand by my point and say if the reason for somebody getting an interest only loan is because they can't afford a 30yr payment... thats a BAD move.

---

Oh Pill, I'm not claiming to be an expert, but I'm also not giving people advice as to what is right and wrong or a 'BAD MOVE' without knowing their entire situation. Everything related to mortgages is relative to people's individual situations.

Nobody above said they were taking an IO loan because they cannot afford the 30 yr monthly payment. I do agree this is NOT a wise move in THIS particular situation.

I'm still curious as to your credentials!

Re: i know its been asked before, but 40 year mortgages

---

Posted by ThongLori

I'm still curious as to your credentials!

---

I don't call them credentials because I hold no degree or certification on the subject. I call them experiences.

Lets see... where do I start.

I have been through THREE separate closings already. I've done deals FSBO as well as with a listing agent.

I've had two mortgages in my name (a 15yr and a 30yr both fixed). I will be re-entering the market for a house either in LI or Westchester later in the year once my two years are up at my current place to save capital gains taxes.

I also have quite a bit of knowledge on how co-ops work since I currently live in one. I have seen quite a few co-op questions here so I try to help out.

In addition to my own personal experience on the subject, I am constantly reading financial news, real estate blogs, anything related to the housing market. I am even more into it now because I want to keep a close eye on market trends so I dont overpay for my next house AND I don't overextend myself and my FW.

I can genuinely say I actually enjoy the subject.

And to top it all off... not only have I read plenty on the right way to do things... I have also read TONS of actual people's horror stories and disasters so I know what to avoid as well.


Hope that helps. When people tend to ask about feedback from interest only loans... I believe they are asking them for the wrong reasons. I do generally feel IO loans are a bad idea.

The way I see it... if somebody really could reap the benefits of an interest only loan and know when and why to use it... they probably wouldn't have to ask in the first place cause they would be educated enough on the subject.

Re: i know its been asked before, but 40 year mortgages

Ah yes, live and learn!! The best way.

Don't know if you have any interest in the NYC market (my obsession) but here are some great blogs/sites to add to your list:

www.brownstoner.com
www.curbed.com
www.therealdeal.net

Re: i know its been asked before, but 40 year mortgages

Thanks for the links.... i will check them out.

Re: i know its been asked before, but 40 year mortgages

---

Posted by DjPiLL

And what guarantee do you have that the house will DEFINITELY appreciate? No guarantee really. What if the interest rates shoot up to 8% by the end of the year. Think your house will continue to appreciate?

What if you get divorced six months after buying the house and are forced to sell. You will be losing money.


Neither loan is smart... but IMO an interest free loan is the worst choice you can make.

Frankly... if you can't afford the payments on a 30yr fixed... you are buying OUT OF YOUR LEAGUE and need to look for something cheaper.

The only time an interest only loan makes sense is perhaps for an investment secondary property.

---

there are NO guarantees regardless which loan one chooses. i did state that the property will 'hopefully' appreciate on its own. but again NO GUARNTEES. we chose the loan that best met OUR needs and one that would allow US to leverage OUR money.

i am confused in re to these statements

'And what guarantee do you have that the house will DEFINITELY appreciate? No guarantee really. What if the interest rates shoot up to 8% by the end of the year. Think your house will continue to appreciate?

What if you get divorced six months after buying the house and are forced to sell. You will be losing money.'

please explain to me WHY we would be ANY better off w/ a 30 yr fixed if these senarios did occur.

NEVER once did i say that IO loans are for everyone as is any other loan. however, it IS the BEST loan for us as it is for others (Lori). in addition, this is NOT an “investment secondary property” for either one of us.

as quoted from your linked site;

'There are many benefits to interest-only mortgage loans. There are many situations where an interest-only mortgage loan could be best for you.......

1 -If you are in a situation where your income is sporadic and would rather have the option of paying as little as possible sometimes and then paying larger amounts when there is more income, for example, a real estate agent or loan officer.

2 - If you are investing your mortgage payment savings in something else that is low risk, and has a much higher return on your money than your house payment..”

i appreciate your advice but agree w/ lori in that you generalize WAY too much. we are ALL in different situations and instead of posting only the negatives of a particular loan, perhaps you should spend time educating others in re: to the positives and negatives of the various loans available.

BTW - we CAN afford the payments on a 30yr fixed and WE are NOT buying OUT OF OUR LEAGUE.

Re: i know its been asked before, but 40 year mortgages

---

Posted by skew

i appreciate your advice but agree w/ lori in that you generalize WAY too much.

BTW - we CAN afford the payments on a 30yr fixed and WE are NOT buying OUT OF OUR LEAGUE.

---

Again... if you would have read what I wrote... maybe you wouldn't say what you just said.

I said SPECIFICALLY if you can't afford payments on a 30yr fixed... you are buying out of your league. I never said you were buying out of your league if you could afford 30yr fixed and decided to do something else.

Plus... the original poster made a very general question asking for feedback on a 40yr loan. I gave a very general answer... no I think its a bad decision.

If the original poster would have said 'I am in such and such a financial situation... have xxxxx money saved.... make xxxxx salary... looking for a place to buy for two years xxxxx... etc etc etc..' Then they wouldn't have gotten a generalization from me.

If you don't like what I say... you are more than welcome to either disagree or not read it at all.

Re: i know its been asked before, but 40 year mortgages

Bank Rate has some great articles about Interest Only loans. This link is a helpful article: IO article

This paragraph from the article above is why we chose to get an IO loan:

If there were such an animal as a typical interest-only borrower, it would be an executive who earns a moderate salary and whose main income is from bonuses once or twice a year, says Jim McFadden, program manager for private mortgage banking for Wells Fargo. An interest-only mortgage would provide the lowest possible monthly payment for lean months, yet allow the executive to pay down big chunks of principal when bonus time rolls around.

I get paid a base and a semi annual bonus which at the end of the year is larger than my base. On a monthly cash flow I like the IO, then when I get a bonus I can pay more and bring down my future payments and put that towards equity in the home.

Re: i know its been asked before, but 40 year mortgages

---

Posted by DjPiLL

---

Posted by skew

i appreciate your advice but agree w/ lori in that you generalize WAY too much.

BTW - we CAN afford the payments on a 30yr fixed and WE are NOT buying OUT OF OUR LEAGUE.

---

Again... if you would have read what I wrote... maybe you wouldn't say what you just said.

I said SPECIFICALLY if you can't afford payments on a 30yr fixed... you are buying out of your league. I never said you were buying out of your league if you could afford 30yr fixed and decided to do something else.

Plus... the original poster made a very general question asking for feedback on a 40yr loan. I gave a very general answer... no I think its a bad decision.

If the original poster would have said 'I am in such and such a financial situation... have xxxxx money saved.... make xxxxx salary... looking for a place to buy for two years xxxxx... etc etc etc..' Then they wouldn't have gotten a generalization from me.

If you don't like what I say... you are more than welcome to either disagree or not read it at all.

---

you have made it QUITE clear on MANY occassions that you are not comfortable w/ IO loans although it MAY NOT be the best loan for many (including yourself), it IS a great option for others.

since you do posses a great amount of knowledge in re: mortgages, perhaps next time should list the pros and cons of the mortgage in question rather than just listing the cons.

Re: i know its been asked before, but 40 year mortgages

---

Posted by skew

perhaps next time should list the pros and cons of the mortgage in question rather than just listing the cons.

---

If somebody specifically asks for pros and cons i will do that. But if they just want feedback... that is what they will get.

Have a nice day.