Deanna - you can avoid the PMI by actually taking two loans. a first mortgage for 80% and a 2nd of 20%. it works out to be the same amt monthly, but since you don't have any loans with over an 80% loan-to-value ratio, you have no PMI.
G - the equity in your home is the home's value minus what you owe on it. So if I buy a $200,000 home in an interest only loan and wait a year...true, i've not paid down the principal at all...but I can get the house re-appraised at that time (doesn't have to be a year, i'm just saying...). Let's say at that point it appraises for $220,000. You've now got $20000 in equity, even though you haven't paid a dime towards it. so obviously, it's a gamble. like Deanna said...if the house doesn't appreciate (or appreciate enough)...you've essentially been paying rent. On Fri, 21 Jan 2005 09:06:32 -0600, G <[EMAIL PROTECTED]> wrote: > I heard about these interest only loans, and frankly I don't understand > their advantages. Isn't the equity in your home directly related to the > amount of principal you've paid down? So, after 10 years of paying off > interest....you own no more of your house than you did when you started. Is > that correct??? > > I was even a little miffed when i learned my standard loan was heavily > front-load with interest. Nearly 75% of my first couple of years payments > went to interest anyway. That was on a 30 year. When I refi'd to my 15, my > principal became more than 50% of each of my payments, which made me happy. > > Whether you are planning on staying in your house or not, it IS a sound and > solid investment while you are there....and if the name of the game is > reducing interest payments....i fail to see the value in interest only > loans. > > Am I way off on this??? > > > > Has anyone gone down the road of interest only loans for a mortgage? > > You make interest only payments for the first 5, 10, or 15 years then > > regular mortgage payments with interest after that initial period is up. > > > > Pros: > > The entire interest initial payments are tax deductible. > > You can take the principal portion of the loan you are not paying and > > invest it. > > Great for people not planning to make the home their final residence. > > > > Cons: > > Need to be a disciplined saver/invester. > > Monthly payments increase dramatically after initial period. > > ? > > ? > > ? > > > > Looking for anyone who might have experience with this type of loan. > > > > Thanks! > > > > Mike > > > > > > > > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Discover CFTicket - The leading ColdFusion Help Desk and Trouble Ticket application http://www.houseoffusion.com/banners/view.cfm?bannerid=48 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:143733 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
