Mortgage Lies and Truths

[NorthCountyMan]

I was a mortgage broker back in early nineties. All I did was refi’s and relied mainly on traditional 15, 30 year fixed and a scattering of ARMs. It was all pretty simple.

Now I find myself in the market for a home (no choice really) and am confused about all of the different lending products out there. My broker tells me that everyone has been getting no interest loans and 30 year fixed are just not popular these days.

Granted, I do have to say I trust my broker (for very good reasons I must add) but I want to feel better about non traditional mortgages.

Let me first ask, what questions should I ask the lender before I jump into something like an interest only loan.
FYI – I’m looking to stay for 7+ years in 1M or so house in N. County.

[JWM in SD]

You’re kidding right??? Have you read the bubble primer yet?? What don’t you understand about all of this yet?

No choice in whether or not to buy? Why? Pressure from the wife? Get a clue man.

[JWM in SD]

You’re kidding right??? Have you read the bubble primer yet?? What don’t you understand about all of this yet?

No choice in whether or not to buy? Why? Pressure from the wife? Get a clue man.

[GoUSC]

There is no such thing as “no choice really”. And I don’t care how much you trust this “friend” of yours. Any kind of creative financing right now is a bad idea. Period.

[GoUSC]

There is no such thing as “no choice really”. And I don’t care how much you trust this “friend” of yours. Any kind of creative financing right now is a bad idea. Period.

[JPJones]

Those are some harsh responses, but it’s the truth. Read through the bubble primer, as I think it will give you the answers you are looking for and help you to ask the right questions.

[JPJones]

Those are some harsh responses, but it’s the truth. Read through the bubble primer, as I think it will give you the answers you are looking for and help you to ask the right questions.

[Arraya]

Just because something is popular does not mean it is a good idea….

I/O loans are rarely a good idea and an absolutely horrible idea in a down market.

Surely your broker must have better reasoning than it’s “popular” for this choice. What is his reasoning?

If you are going to be in your house for 7yr+ then I assume he has you looking at 7 or 10 yr arm. correct? If it is anything less that could be suicide in this market.

Today the 30 year is a lower interest rate than the 7 and 10 year arms. So I can not fathom what he is thinking…

[Arraya]

Just because something is popular does not mean it is a good idea….

I/O loans are rarely a good idea and an absolutely horrible idea in a down market.

Surely your broker must have better reasoning than it’s “popular” for this choice. What is his reasoning?

If you are going to be in your house for 7yr+ then I assume he has you looking at 7 or 10 yr arm. correct? If it is anything less that could be suicide in this market.

Today the 30 year is a lower interest rate than the 7 and 10 year arms. So I can not fathom what he is thinking…

[JWM in SD]

“Those are some harsh responses”

Yeah I know, but Harsh Times call for Harsh Responses.

Come on, you think that was legitimate post??? Oh no, that was troll. That guy just about used every cliche in the book in that post.

[JWM in SD]

“Those are some harsh responses”

Yeah I know, but Harsh Times call for Harsh Responses.

Come on, you think that was legitimate post??? Oh no, that was troll. That guy just about used every cliche in the book in that post.

[SD Realtor]

Don’t fall for any of the hype you hear from anyone. People used exotic financing vehicles because the majority of them were buying homes that they could not afford.

There is a small segment of homebuyers who are savy and they CAN make a better return on their money then the average joe. For these savy people it may indeed make sense to use leverage and not tie up money in a home when they can make a better return. If you are one of these types then more power to you. If not then don’t risk it.

No matter how great all of your friends are, when you are making an investment as substantial as a home, I STRONGLY advise you to shop with several mortgage brokers… compare programs, rates, and do what is best for you, not what other people do.

Personally, I am risk averse and stick to the old 30 year fixed rate, fully amortized loans and I buy the rate down. If I was savy enough to make a better return on investments I would possibly try a 10 year interest only loan but I am not.

SD Realtor

[SD Realtor]

Don’t fall for any of the hype you hear from anyone. People used exotic financing vehicles because the majority of them were buying homes that they could not afford.

There is a small segment of homebuyers who are savy and they CAN make a better return on their money then the average joe. For these savy people it may indeed make sense to use leverage and not tie up money in a home when they can make a better return. If you are one of these types then more power to you. If not then don’t risk it.

No matter how great all of your friends are, when you are making an investment as substantial as a home, I STRONGLY advise you to shop with several mortgage brokers… compare programs, rates, and do what is best for you, not what other people do.

Personally, I am risk averse and stick to the old 30 year fixed rate, fully amortized loans and I buy the rate down. If I was savy enough to make a better return on investments I would possibly try a 10 year interest only loan but I am not.

SD Realtor

[CMcG]

I understand trolling, but usually isn’t there some benefit, some agenda for the troll to push that will be advantageous to him? If so, I can’t figure out this one’s motive. Maybe he’s just having fun with us?

If it isn’t a troll, I’m with some others here: Don’t go interest only unless it’s for at least 10 years on a fixed 30-year rate.

[CMcG]

I understand trolling, but usually isn’t there some benefit, some agenda for the troll to push that will be advantageous to him? If so, I can’t figure out this one’s motive. Maybe he’s just having fun with us?

If it isn’t a troll, I’m with some others here: Don’t go interest only unless it’s for at least 10 years on a fixed 30-year rate.

[Author]

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