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NOVEMBER 20, 2006 All Interest Only loans are not necessarily risky! The Best Bet is the 30 year Fixed Mortgage offering an interest only feature of 10 or 15 year period. The benefit is that the Rate is FIXED all 30 years. After the interest only period of ten years, the mortgage would then adjust to a 20 year Fixed Principal and Interest payment or After the Interest only period of fifteen years, the mortgage would then adjust to a 15 year Fixed Principal and Interest payment. Somewhere in the middle of risk is the Adjustable Rate mortgages (ARM’s). An arm has a fixed rate and payment for a specific period of time; let’s say 3, 5, 7 or 10 years. Also, a choice of the interest only period offered is typically 5 or 10 years. However; after the fixed period, in year 4, 6, 8 or 11; the rate can then adjust yearly which could possibly increase the rate and monthly payment perhaps hundreds of dollars per month. In addition, after the interest only period of 5 or 10 years, the payment also adjusts to principal and interest which could be another few hundreds of dollars increase in the monthly payment. An arm is great for a borrower whom:
MOST Risky ~ but those payments sure do look attractive for One Month. The option arms with 4 payment options and the low start rate of 1.75% - 2.75% sure look great on paper. The payment does stay the same for the First year; however the rate can fluctuate monthly. So if a borrower ONLY pays the minimum payment; the RISK is negative amortization which means Your LOAN BALANCE can go up and you can owe more than the initial loan. Each year the payment is only allowed to increase 7% ~ even though the rates can adjust up to the fully capped interest rate typically between 9.95% - 12%. This is a good program ONLY for someone whom earns a significant BONUS or COMMISSIONS consistently to pay at least the INTEREST only payment or catch up the difference once a year. Benefits to an Interest Only:
Remember, Real Estate is one of the ONLY Appreciating assets you own, not to mention the tax benefits. 90% of all millionaires build wealth through owning Real Estate. We can make that happen for you.
NOVEMBER 5, 2006 Rates are still at historical low's as a 30 year fixed is just below 6.5% for no points. It is a good time to buy a home, whether your first home, a vacation home, an investment home or a bigger home. The great news is that most seller's are negotiating. From the financing perspective, request seller assistance towards closing costs and points to lower your monthly payment and/or total cash to close is a great idea. For every $5,000 applied towards the loan, this will affect your monthly payment about $30 per month. However, if the $5,000 was utilized to paying points to obtain a lower interest rate, this could potentially lower your monthly payment 3 TIMES as much to perhaps $90 per month using the same amount of money. Another idea to improve your overall cash flow is to look at perhaps paying off a car loan. If the auto loan balance is $10,000 and the monthly payment is $350, I would suggest paying off the car instead of applying the $10,000 towards the loan. If applied towards the mortgage loan, your monthly payment will only be reduced by $60 per month, versus eliminating a $350 per month payment. Please call us to review your financial options.
OCTOBER 27, 2006 "On Wednesday, October 25th, 2006 Ben Bernanke of the Fed decided to halt any fed rate hikes for the THIRD time in a row. This is good news for the next few months as we expect rates to stay relatively flat and possibly see a slight decrease. It's a great time to buy now while interest rates are still at historical lows under 6.5% 30 year fixed rate. The forecast for next year is that if the economy is still doing well, the fed could increase the fed rate again to keep inflation at bay. While the 30 year fixed rate is so low, it's good time to take advantage of buying your first home or a vacation home or an investment property to build wealth. 90% of all millionaires made their wealth In real estate and you can too."
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