Subprime Problems To Accelerate

[Ozzie]

Just to clarify, all I/O loans give you the option to pay principal. I pay about $1200 of additional principal each month which is actually more than what the 30 year amortized payment would be. As far as I know there is no way to tell what the actual loan balance on individual loans are until they get paid off. I assume this because I get solicitations almost daily and they assume my loan balance is the original loan amount which it is not.

[Ozzie]

Just to clarify, all I/O loans give you the option to pay principal. I pay about $1200 of additional principal each month which is actually more than what the 30 year amortized payment would be. As far as I know there is no way to tell what the actual loan balance on individual loans are until they get paid off. I assume this because I get solicitations almost daily and they assume my loan balance is the original loan amount which it is not.

[PerryChase]

Ozzie, point well taken.

By why didn’t you get a 15-year mortgage to take advantage of lower mortgage rates?

[PerryChase]

Ozzie, point well taken.

By why didn’t you get a 15-year mortgage to take advantage of lower mortgage rates?

[Ozzie]

I like the flexibility of the I/O. I’m an investor in different enterprises (some RE developments, some startups, etc – my wife says, “what exactly do you do?”) so when a good opportunity arises I need to be able to fund it quickly. Right now I have a good deal of cash so I’m applying extra cash to the principal which is probably dead money for the next few years, but it pays down the loan balance a bit. I’ll move in about 10 years when the kids get out of college. I guess it would be good to have the house paid off, but I think I can put the money into assets that should appreciate 3-5x traditional housing returns. If this decline is like past ones we’re about 2 years into a 6-8 year decline. After that I think prices will begin another climb where prices double from the bottom in about 5 years. If I play my cards right I’d like to buy my retirement house in about 3-4 years at the bottom and then unload my current home as prices start going up again.

Of course life never goes as planned…..

[Ozzie]

I like the flexibility of the I/O. I’m an investor in different enterprises (some RE developments, some startups, etc – my wife says, “what exactly do you do?”) so when a good opportunity arises I need to be able to fund it quickly. Right now I have a good deal of cash so I’m applying extra cash to the principal which is probably dead money for the next few years, but it pays down the loan balance a bit. I’ll move in about 10 years when the kids get out of college. I guess it would be good to have the house paid off, but I think I can put the money into assets that should appreciate 3-5x traditional housing returns. If this decline is like past ones we’re about 2 years into a 6-8 year decline. After that I think prices will begin another climb where prices double from the bottom in about 5 years. If I play my cards right I’d like to buy my retirement house in about 3-4 years at the bottom and then unload my current home as prices start going up again.

Of course life never goes as planned…..

[blahblahblah]

Also don’t forget that people will try to salvage their home using every possible method at hand: credit cards, 401K loans, etc… That will drag this out even further. It’s going to be a long slow ride down.

[blahblahblah]

Also don’t forget that people will try to salvage their home using every possible method at hand: credit cards, 401K loans, etc… That will drag this out even further. It’s going to be a long slow ride down.

[Author]

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