| Most of us have heard of home equity
| |
| | interest on the loan and you might get
|
| loans. You know, refinancing your home
| |
| | stuck with a mortgage payment even higher
|
| for a second mortgage to pull out some
| |
| | than had you financed a more traditional
|
| extra cash for home improvements or bill
| |
| | loan.The Los Angeles Times ran a feature
|
| consolidation. But, did you know you
| |
| | article by Jack Guttentag about interest
|
| could refinance your home and actually
| |
| | only home equity loans. "In the 1920s,
|
| pay less on your mortgage every month? If
| |
| | loans of this type were the norm;
|
| you are planning to stay in your home for
| |
| | borrowers typically refinanced at term.
|
| less than ten years or need some time to
| |
| | But the Depression of the '30s caused
|
| stash away some much needed savings, an
| |
| | many to go into foreclosure, and lenders
|
| interest only home equity loan might work
| |
| | stopped writing the loans." But Guttentag
|
| for you.Home equity loans and credit
| |
| | also writes that the interest only loan
|
| lines usually have variable time periods
| |
| | is not always the smart investment.
|
| ranging from three to ten years. After
| |
| | "Suppose you have a 6.25% mortgage and
|
| the initial period is complete, the loans
| |
| | your financial plan calls for increasing
|
| convert into a full amortized loan.
| |
| | your wealth this month by $100." If you
|
| Here's an example: In a traditional loan,
| |
| | put it in the bank, you may earn 2% to
|
| each monthly payment includes interest
| |
| | 4%. If you put it in bonds or stock, you
|
| and principal. After five years of
| |
| | may earn more but you take a risk. If you
|
| traditional payments, the balance of a
| |
| | use it to reduce the balance of your
|
| $100,000 home would show as $93,054. A 10
| |
| | mortgage, you earn 6.25% with no risk at
|
| year interest only loan requires only an
| |
| | all.The tax saving on mortgage interest
|
| interest payment for the first ten years.
| |
| | does not affect such comparisons because
|
| After ten years of regular interest
| |
| | you must pay taxes on interest earnings.
|
| payments, the principal remains at
| |
| | Suppose you are in the 39.1% tax bracket.
|
| $100,000. The loan is then re-amortized
| |
| | Then your 6.25% mortgage costs only 3.81%
|
| and regular payments are made."An
| |
| | after taxes, but a 4% CD yields only
|
| interest-only home loan may also be a
| |
| | 2.44% after taxes. "The investment that
|
| good option for people who expect to be
| |
| | is most advantageous before taxes is also
|
| in their homes for less than ten years.
| |
| | most advantageous after taxes." Bottom
|
| The average homeowner stays in their home
| |
| | line is that an interest only home equity
|
| between five and seven years. As
| |
| | loan is a smart choice for homeowners
|
| mentioned before, home mortgage payments
| |
| | with high market value (HMV) planning to
|
| are mostly interest for the first years
| |
| | sell before the interest only period
|
| of the loan. Many homeowners like the
| |
| | expires. If you choose an interest only
|
| option of making interest only payments
| |
| | second mortgage as a financial strategy
|
| and using the extra money as they please-
| |
| | for increased earnings, make certain the
|
| save for college tuition, make home
| |
| | interest you earn elsewhere is worth the
|
| improvements, or buy a much-needed new
| |
| | added interest when the interest-only
|
| car."If you plan on selling your home
| |
| | loan converts.Nick Rian is an
|
| before the interest only time period, no
| |
| | award-winning journalist whose journalism
|
| harm no foul. Keep in mind the interest
| |
| | credits include awards from the
|
| during the interest only portion of the
| |
| | Associated Press, Wisconsin Broadcaster's
|
| loan is fully deductible according to the
| |
| | Association and The Milwaukee Press Club.
|
| IRS. But, remember after the initial
| |
| | Today Nick publishes loan articles in
|
| period of ten years the principal balance
| |
| | San Diego California.
|
| has not changed. Some lenders up the
| |
| |
|
