A health care technician earning probably $60K/year is paying interest only on a $500K mortgage, and nobody sees a problem? He’s at 5x income and not even paying any principal. How will he start paying the principal? Will he be forced into I/O loans his entire life? Even if his wife works and they earn $120K together, he is in over his head with that mortgage, IMO. I also think it’s amusing that he lives in a $1.1 mil house, because some from out-of-state think that you have to be rich to have a $1.1 mil house, and obviously he is not.

So he could refinance now with another I/O loan? He would pay $20K for the privilege of negatively amortizing his loan for another 10 years? Well, it doesn’t seem financially prudent to me, but at least he would be able to keep his house.

The question is: if he got his I/O loan in 2004 when the rates were 4%, and they are 6% now, that would be a 50% increase in his payments and can he qualify for that?

Most people won’t be able to refinance with a funny money loan, because they can’t swing payments at today’s higher interest rates.

KingKong, welcome back to the forums. He seems like he doesn’t want to sell, because he can’t stomach “losing” the equity that he had one year ago. He hopes that interest rates will be low in 3 years, so he can refinance at the same or lower rate he had in 2004. For all I know, he could incur penalties for refinancing early, and he could have some HELOCs.