Comments on: Tough times ahead for folks with interest-onlys and ARMs http://frugalunderground.com/tough-times-ahead-for-folks-with-interest-onlys-and-arms/ money: saving more, making more, needing less Tue, 06 Jan 2009 08:50:50 +0000 http://wordpress.org/?v=2.5.1 By: jennifer http://frugalunderground.com/tough-times-ahead-for-folks-with-interest-onlys-and-arms/#comment-309 jennifer Fri, 19 May 2006 23:14:57 +0000 http://frugalunderground.com/test/tough-times-ahead-for-folks-with-interest-onlys-and-arms/#comment-309 i think that this is another sign of how americans in general do not understand credit and personal finance. an interest only loan and arms are good ideas, in the right situation. but you personally must understand those situations and not count on a loan officer to even remotely look out for you. we have an interest only loan. it work(s/ed) great for us. it is fixed through 7 years which we figured we would sell the home within 7 years and if we didn't we would refinance to a fixed rate before the 7 year mark. now you ask, why not just get a fixed rate to start with? because we were 90% sure we were going to sell, so why pay a higher interest rate on a house that you aren't going to keep in the long term. we also needed to qualify for buying this house without selling our old one. we looked at the numbers and if we didn't sell our old house we could manage a payment on both and look to rent the old house. the interest only would have allowed us the flexiblity we needed for the few months we would have been juggling two mortgage payments before the old one was rented. as it turned out we sold the old one and we moved in to our new one with 20% down and some cash to spare. now it is 5 months after we moved in and becuase of a job change we are selling our house. we are out less interest than we would have been if we had gotten a fixed mortgage. but we looked at what we were doing and plan on paying off a house someday. when we know we are going to be in one place for a long time and our jobs will too. until then, we'll continue to get arm's if they have a more attractive interst rate. sometimes they don't, sometimes they do. i think that this is another sign of how americans in general do not understand credit and personal finance. an interest only loan and arms are good ideas, in the right situation. but you personally must understand those situations and not count on a loan officer to even remotely look out for you. we have an interest only loan. it work(s/ed) great for us. it is fixed through 7 years which we figured we would sell the home within 7 years and if we didn’t we would refinance to a fixed rate before the 7 year mark. now you ask, why not just get a fixed rate to start with? because we were 90% sure we were going to sell, so why pay a higher interest rate on a house that you aren’t going to keep in the long term. we also needed to qualify for buying this house without selling our old one. we looked at the numbers and if we didn’t sell our old house we could manage a payment on both and look to rent the old house. the interest only would have allowed us the flexiblity we needed for the few months we would have been juggling two mortgage payments before the old one was rented. as it turned out we sold the old one and we moved in to our new one with 20% down and some cash to spare.

now it is 5 months after we moved in and becuase of a job change we are selling our house. we are out less interest than we would have been if we had gotten a fixed mortgage.

but we looked at what we were doing and plan on paying off a house someday. when we know we are going to be in one place for a long time and our jobs will too. until then, we’ll continue to get arm’s if they have a more attractive interst rate. sometimes they don’t, sometimes they do.

]]> By: Blaine Moore (Run to Win) http://frugalunderground.com/tough-times-ahead-for-folks-with-interest-onlys-and-arms/#comment-308 Blaine Moore (Run to Win) Wed, 05 Apr 2006 18:28:30 +0000 http://frugalunderground.com/test/tough-times-ahead-for-folks-with-interest-onlys-and-arms/#comment-308 I just bought a house last week, and it will not affect me at all. Fixed rates are the way to go. I doubt I'll have it paid off in the near future though... I just bought a house last week, and it will not affect me at all. Fixed rates are the way to go. I doubt I’ll have it paid off in the near future though…

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