No. of Recommendations: 0
"I am getting 8% interest and that is a lot better then the alternatives."

For fixed-income investments, this is a very good rate! Today one can get a mortgage for ... (consulting bankrate.com) 30-year FRM@5.92%, 15-year FRM@5.25%. These are with good credit ratings.

Depending on when those mortgage were taken out, 8% could have been the going rate (e.g., around February-June 2000). If the buyers had good credit, they can refinance at the current rates and then the sellers would have the same poblems as other collateralized mortgage obligation investors: having the "bond" called and now have a bunch of cash with no where to invest at such attractive rates. If the buyers can't refinance at a lower rate, it would have been because of poor credit, which means the sellers are taking on risks for carrying those mortgages.

So, while 8% sounds attractive in light of today's rates, they are far from a "free lunch".
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement