Just be sure you understand how the balloon loan works. You pay an amortized payment based on a schedule such as 15 years. Your balloon full payoff could be due at a different time before that point, say 5 years.
You have to be ready to refinance or sell the house before or at the balloon payment date.
The pitfall is at that time, what is the house worth and what will your credit and income be at that point? That's the trap that has caught a lot of ARM loan people. They planned to refi or sell after a certain number of years, but they can't because property values plummeted below what they owe on the loan. You'll have a problem if the value drops below what you need to refi.
Safer bet is a 30 year conventional amortizing loan. Make principal payments above that payment if you want. That way you don't HAVE to refi just to stay in the house.Is an amortized balloon mortgage loan a bad idea?
Well, you want to see what other banks are offering before you go with the first company. Make sure you do your home work before you sign. Now, if your credit is not good then you don't have may options or if your income isn't high based on what you are trying to buy then once again you are not going to have many options.
But, if you have a good credit score and a good income level then you should get plenty of offers. Have an Attorney look them over first.
Yes, it's the worst decision you will make in your life.
One that you will regret for many,many years to come.
Only do 15 or 30 year fixed.
No ballons, no options, nothing adjustable, nothing amortized.
Haven you been watching the news - that's why everyone is in such a mess.
The bank obviously wants your house. And I don't blame them, we are nearing a bottom, your house would be a perfect thing for the bank to own.
If you can, please, please do a 30 year fixed - and say no to those scammers.
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Horrible, horrible! This is the kind of thing that made people lose their houses in the housing crash. People became comfortable with their $1000 a month payment, not thinking about the future, when that balloon payment would come due. After all, they could just refinance before the balloon was due, right? Then housing values dropped, and they couldn't refinance. And there was no way they could come up with $50,000 on the spot when the time came. That's putting yourself in similar peril of losing your home, if you ask me.
Please keep shopping. And while you're doing it, save furiously. With a larger bank balance and more down payment, you should be able to find a more conventional loan.
VERY bad. Unless you are rich and consider this property investment only. In this economy paying off a mortgage is not a good thing. Go with a 40 year fixed. You can always make principal payments if you want to pay off early and the money save monthly may keep you from hardships that do come up.
unless that gives you the same payment and payoff schedule as a fixed rate loan, why would you do it - what is the advantage vs a bank 15 yr loan? if there is a ballon pmt due after 15 yrs, it is not a 15 yr loan - probably no better than a 30 yr loan
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