Comments on: No Money? Buy a Home!

By: Jason

Jason — Sat, 10 Jun 2006 14:36:55 +0000

I sound like I’m in the minority here, but an interest only loan scares me a lot. I couldn’t imagine paying money and not watching my balance go down. I think I’ll just pay off my debt and save up my down payment.

By: Emily

Emily — Wed, 16 Nov 2005 19:57:38 +0000

Great post! Interest only mortgages are so controversial these days. Along with religion and politics, you can’t bring up the topic of home loans at dinner anymore!

These kinds of loans can definitely work for some people, the trouble is when borrwowers use interest only loans to buy a house that they couldn’t afford with a standard loan.

There’s an interesting article about this topic by John Ulzheimer online here – http://www.creditbloggers.com/2005/11/interest_only_m.html

By: savvy saver

savvy saver — Tue, 14 Jun 2005 17:15:25 +0000

Interest only loans are really good for those with “wavy” cash flows. Interest only loans aren’t inherently bad, it’s when they are abused by people to buy houses they can’t afford that they can lead to trouble.

Also, I bought my house with only 5% down (and I had to borrow that!) about 2.5 years ago. I’ve since taken out a home equity line to get rid of PMI, and I have my first mortgage down to 22 years left, and my second has about 9.5 left. Not ideal, but I’m making it work.

By: Paul Havemann

Paul Havemann — Sat, 12 Mar 2005 03:15:29 +0000

Jim, glad you liked it. Our site offers a lot of free advice about personal finance. Hmmm, maybe we should start a blog… ;}

By: jim

jim — Fri, 11 Mar 2005 20:30:33 +0000

Paul,
I liked that article you posted and I like how it gave pros AND cons. I’m looking into getting a home and I’ll no doubt reference that article if I look into interest only mortgages in the future.

By: Paul Havemann

Paul Havemann — Fri, 11 Mar 2005 19:54:51 +0000

Darren, it sounds like you’ve found a pretty good way to deal with irregular income. A lot of people just don’t seem to understand it, though, and that unfortunately includes more than a few loan brokers.

There’s an article titled The Principal Facts of Interest-only Mortgages, which explains the pros & cons pretty clearly. It was written by the Keith Gumbinger quoted in the CNN article. It’s been very well received. (Full disclosure: He’s in the office next door to mine. ;)

By: Flexo

Flexo — Wed, 09 Mar 2005 18:30:12 +0000

It seems like that option makes sense for you. Good luck!

By: Darren R. Sussman

Darren R. Sussman — Wed, 09 Mar 2005 07:47:43 +0000

Yes, in fact, we went with an interest-only loan for our new house, and there were several reasons. The first one was that we knew that cash would be tight when we first moved in because of all the other expenses associated with this purchase. Second, with my non-standard income, we never know from month to month if we’ll have a lot of money or not much at all, so that way on months when I do very well, we can pay more than just the interest and on the other months, we can pay interest only. Then, hopefully, in a year or two, finances will have stabled out from the initial move expenses and we’ll be able to move to a more standard loan.

As you say, there are lots of options. The important thing is to go into it with a clear head and not make an emotional decision based on simply wanting to buy.