I'm stunned

[lapsedagnostic]

Quicken Loans now offers a mortgage where you don't have to actually pay the principal. just the interest.

Really.

I'm stunned by the evil beauty of it all.

I guess after thirty years you have a hell of a balloon payment.

Comments

[ketzl.livejournal.com]

That's what we're doing! We pay extra against the principal, just because. In 10 years we have to refinance... but in the meantime our minimum payments are cheap cheap cheap.

[rdhdsnippet.livejournal.com]

It's not a new loan format, it's just that with housing prices so out of control in a lot of places, it's being used as creative financing more often and by different folks these days.

Historically it's used by folks who plan to buy and sell for investments.

What's worrying is that if the bottom drops out there are going to be a lot of people upside down on their loans when they go to refinance. It's bad enough with a car, I'd sure hate to worry about it with a house, yano?

[lalartu.livejournal.com]

So not that I have a full grasp on all the implications, but as I understand it.

say you have a 30yr fixed with 10 years of interest only...
If you only pay the interest you get to have interest plus principal
at a 20yr payoff rate in 10 years, and no equity from paying down
the principal.

that scares me. it does sound good for investment properties if you are planning to improve and flip them.

[kernmantle13.livejournal.com]

I'll bet they'll let you use your mastercard to make your mortgage payment too... In my next life I'm gonna be a predatory lender. Or a womens bicycle seat.

It's not new

[sierra-victor.livejournal.com]

as Rdhdsnippet points out, but for a home ownner, as opposed to someone who's buying real-estate to flip in three to five years, it is pure evil.

I was a financial idiot for years, and one of my weakest points was in realizingt in just insane it is to your finaces to pay high interest, or in this case, nothing but interest. I finally got better. If times get bad, if your job goes bad, if your relationship with your S.O. who you're buying the house with goes better, you are utterly screwed. You own nothing but you still have property obligations. At least with renting, you can just walk away and get something cheaper. This... words fail me... you're right it's stunning in its evil beaity.

S_V