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January 06, 2005



And you can respond with outstretched hand as you offer to 'lend an ear'.

Bob O'Shaughnessy

My fabulous accountant and money manager (the one who cut up my credit cards on the day I married her and the one who paid off all of all of my student loans in three years on her kindergarten teacher's salary) has a real problem with the 'interest-only' loans.

From what I gather, you gain no equity on the home while you are paying the loan, which is half the reason to be buying a house for yourself, instead of renting.


While Bob is right about the 'interest only' loans, I don't think that's what you are asking.

I would say the 5 year 'balloon' payment loans depend on a couple questions. First, how long do you expect to stay in your new home? If it's less than 5 years, then the loans are fine. If longer, then you have to look at what you expect interest rates to do between now and then. If the economy were to collapse, interest rates would likely go way up, making the 5 year loans a poor idea. Short of that, interest rates are close to their all time low, implying that they would almost certainly go up in the next five years. So it would depend on your deal. If you get a really good rate on the 5 year, it still may be a good idea, otherwise, the 30 year loans probably make more sense.


i would say no on the 5 year. maybe on a longer one. we've only been in here a year and i'm feeling a little queasy about the 7 year, since i like the house a lot.

just because they will lend you a giant amount does not mean you should use it.. you know that i guess.. i'm just saying. they will def. try to make you think you can afford more house than you can with the monthly payments and prop. tax

but it sounds like you are doing great. and talking to 2 lenders, way to go! now you can bargain for lower interest rates!!!

Ms. Jane

Interest Only loans are like buying futures. Not a sound investment because it makes the assumtion that the housing market will never hit a slump.

I'll have to kick your ass if you do that, and I really would rather cuddle.

Also consider your personality, like, if you do get a house, are you ever going to move again? I've owned my house for eight years now, but I only have my employment to worry about. How likely is it that Manny would take a job elsewhere when all the Candy Factory jobs are here?

Really good people to ask are your real estate agent and your loan broker.


With interest rates being as low as they are, I'd aim for a 30-year fixed right now, if you could. That's your safest bet -- one that will leave you with the least amount of anxiety once you close on your house.

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