[quote=FormerSanDiegan][quote=flu]At this rate, one of relatives who did interest only on a $1.5 million loan is looking pretty smart to me…And to think a few years ago, I asked them “are you sure”….Said folks could pay off the loan, but their loan is effectively 3.6%, while their cash on hand is earning interest about 4% in a portfolio….
Sigh, and to think I thought I was smart by doing a 30 year fixed….[/quote]
I doubt they will be ahead of the game over the course of 30 years, but for now (and I suspect the next couple years) they will be well ahead of the game.[/quote]
I don’t know. I don’t think they can lose. Because let’s just say this thing continues for another 7-8 years. I think they have been on IO for about 6 years. Even if rates pop up, they can just close the loan. So, I think for them, this was the smartest thing to do. Now if 30 year comformings would drop to below 4, that’s a different story… Ah, one can dream…..
