for you experts out there.... what in your opinion are the cons for an interest only home loan (aside from the possibility of interest rates going way up)?
TIA
DjPiLL
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Re: Interest Only Loan
Come on people. You are talking to somebody that landed 5.375% 30yr fixed in October when every other bank was 5.75% and up. I know my shyt when it comes to this topic.
First off... forget about going to banks in person to apply. Waste of time cause their rates are overpriced. Check out mortgage brokers FIRST. Ask them for their wholesale rates.
Then use the power of the internet. I recommend calling places found on bankrate.com. Thats where I found my broker and he got me a killer rate because I told him I got his number online.
Give him a call and ask him what he can do. He may be able to do that same 6.25% loan WAMU was going to give you at the bank... for 6.0% or maybe even less.
He got mine through Bank of America. They were great and he got my commitment in five business days.
(his website doesn't look like much - but trust me he is the real deal - tell him Richard T. sent you)
SomethingBlu
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Re: Interest Only Loan
Posted by dleeny
Sasha, don't just get 1 quote. you can apply for a loan at any bank. Credit Unions have really good rates. so do other banks. we got pre-approved today and we'll find out next week from another bank we applied at. we're going to apply at BFCU as well.
Thanks Dina! We're working with a mortgage company that does various quotes, but that was the best we got. It was my sister's referral and they seem OK but we're def going to see what else is out there. Although the % change is less than 1 and we're prob getting a 'small' mortage of about $150K - it's still a couple of thousand that we would save. We're buying soon and there's so much info...
Mrs. dleeny
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Re: Interest Only Loan
Posted by SomethingBlu
Posted by dleeny
Sasha, don't just get 1 quote. you can apply for a loan at any bank. Credit Unions have really good rates. so do other banks. we got pre-approved today and we'll find out next week from another bank we applied at. we're going to apply at BFCU as well.
Thanks Dina! We're working with a mortgage company that does various quotes, but that was the best we got. It was my sister's referral and they seem OK but we're def going to see what else is out there. Although the % change is less than 1 and we're prob getting a 'small' mortage of about $150K - it's still a couple of thousand that we would save. We're buying soon and there's so much info...
I'm a beginner too! DH and I are like sponges right now, we're researching EVERYTHING! DH's cousin is a mortage broker in LA, but he can work with us here too. he's helping us bigtime! we're holding out for the best rate we can get!
DjPiLL
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Re: Interest Only Loan
Posted by dleeny he's helping us bigtime! we're holding out for the best rate we can get!
Rates are very low right now. If you can lock in... I would if you can land one of those rates I mentioned previously.
The rates will most likely go back up soon. I am a little shocked at how low they realy are currently. National average is hovering around 5.57% currently.
Mrs. dleeny
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Re: Interest Only Loan
Posted by DjPiLL
Posted by dleeny he's helping us bigtime! we're holding out for the best rate we can get!
Rates are very low right now. If you can lock in... I would if you can land one of those rates I mentioned previously.
The rates will most likely go back up soon. I am a little shocked at how low they realy are currently. National average is hovering around 5.57% currently.
thanks for the info! much appreciated!!
we need to find something within the next few months. we need to be out of our apt by mid May but we need to know for SURE about a house by 4/15... not that long AT ALL!
DjPiLL
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Re: Interest Only Loan
No problem. Just don't get nutsy if the rates jump up to 6.5% and above by April. Newsday had an article predicting rates of 7% and higher by mid-year (I think thats a little far fetched myself).
When we decided to buy the house we are in now... I could have continued looking to try to find that 'perfect house'. But I saw a great opportunity to land a killer rate and I jumped on the first house I saw that met my 'minimum requirements'.
If i would have waited two months... my 5.375% would have been more like 5.875% or higher. Thats an extra $150 a month on my payment... and about 100k worth of additional total interest through the life of the loan.
Meaghan729
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Re: Interest Only Loan
when long term interest rates go up, housing prices tend to decrease. (housing market is similar to bond market).
just a thought!
eta: also, interest only loans allowed people to buy houses they normally couldn't afford, which was a factor (not the only factor, but a factor) in the dramatic increase in housing prices over the past few years.
FallBride05
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Re: Interest Only Loan
DH makes a VERY GOOD salary. And either way we were able to afford the house we ended up with (he wouldn't have bought it if we couldn't) And is very smart when it comes to finances. We took out an interest only mortgage with I believe a 7 year fixed interest rate. DH's plan is that the mortgage will be paid off between 7-10 years from now. I have no doubt it will happen.
I know he researched this all to death when we were house hunting.
Blu-ize
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Re: Interest Only Loan
Posted by FallBride05
DH makes a VERY GOOD salary. And either way we were able to afford the house we ended up with (he wouldn't have bought it if we couldn't) And is very smart when it comes to finances. We took out an interest only mortgage with I believe a 7 year fixed interest rate. DH's plan is that the mortgage will be paid off between 7-10 years from now. I have no doubt it will happen.
I know he researched this all to death when we were house hunting.
If you pay off your house in that time frame then your risk is very low with the IO loan. Good for you!
