UnThreaded | Threaded | Whole Thread (77) | Ignore Thread Prev | Next
Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308232  
Subject: Re: Interest Only Mortgage Date: 9/22/2005 2:06 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Well, I actually did this, for the reasons stated above, in February of this year. BUT, I had a huge problem. My house was appraised during the refinance at $260K. (I originally paid $130K but had taken money out so my loan was at $185K). I was taking some money out during the refinance to pay some of the CC debt off, but not all so the total new loan amount was $204K. No problem I thought. I thought the 260K appraisal seemed high but was certain I could get 235-240K.

Went to a realtor to talk about starting the sale process when lo and behold, the appraiser really pulled the wool over my eyes. Apparently the going rate for a house like mine is at tops $215K. I got another realtor, same conclusion. I was ignorant about appraisals, should have done more homework but I didn't. My tax assessment assessed the house at $200K without knowing I have a finished basement and second full bath and cooling system in the house so I just assumed I could get 230-240K.

This is of course, very circumstantial. In addition though, I lost my job in May and was on a VERY limited budget until a few weeks ago when I started working again so having a lower mortgage payment was good for me.

I agree that buying a house initially with a no interest mortgage is not good. But in my case, I think I'm OK as I do plan on selling in a year or so. I took my equity already and am OK with that, it happened, it's the past, I have new future goals and better saving goals that I didn't have before. I will either break even or make a teeny bit when I do sell (unless I keep it a really long time).

I'm also lucky because my house is in an old 1940's neighorhood surrounded by brand new housing, schools, hospitals and shopping in a major city. The chances are very good it will continue to increase in value. It's an area where people are starting to pop the tops on older ranch homes (mine) and build up or out (huge lots).

So I'm not sorry I have an interest only but would only advise someone to do this if they own the home and have equity and plan on selling anyway within the length of the loan term.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (77) | Ignore Thread Prev | Next

Announcements

TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
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.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! 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