|Interest Only Loans |
|30 Year Interest Only | Zero Down Payment|
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30 Year Interest Only
When applying for a 30 year interest only loan, the prospective home owner has to be careful that she doesn't get in over her head with monthly payments that she can't afford. Having shopped around for several months to find the perfect house, she must decide how many points she can afford to pay and how this will affect the monthly mortgage. But when everything is said and done, an interest only loan means the principal will be paid in the latter years of the loan, and that only interest on the principal will be paid in the early years.
For large loans, this makes sense, especially when the economy is thriving and a person is moving up the corporate ladder and getting yearly raises. But these days the economy is not running along so smoothly and no one is completely certain that there will even be a job, tomorrow. Nevertheless, we all need a home, and when faced with the prospect of getting either a fixed rate mortgage or an adjustable rate mortgage (ARM), it is a bit confusing.
If the interest rates are going to go down in the future, then an adjustable rate mortgage, like bonds, makes good sense, but think about the predicament of the country. America owes trillions in sovereign debt, and the government, entrusted to safeguard social security trust fund, has squandered decades of savings by the public. Now, no one knows for sure how this money is going to be repaid. The price of gold is escalating like mad, a forewarning by savvy investors that interest rates are going to go up, maybe even explode. And what happens when interest rates explode is that the ARM becomes very bad for the home owner who stuck herself with unpredictable payments in the future.
The homeowner who is "upside down" in a house can always walk away from the house, declaring bankruptcy or whatever it takes to get out of paying on a house that costs more than what it is worth. The homeowner might consider a short sale to get rid of the home, but it is not always the solution. They payments that have already been made by the time an owner figures out that she will never have the house paid off in her lifetime become a source of depression and disillusionment in the American dream.
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