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Old 08-25-2007, 02:54 PM
 
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can anyone tell my about these types of loans
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Old 08-25-2007, 04:56 PM
 
Location: Charlotte, North Carolina
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they are longer in term which means lower payments, but the interest will be slightly higher.

Most of the 40yr or 50yr products have a 10yr interest only period for the first 10yrs, then they start amortizing on the 11-40 or 11-50

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Originally Posted by wadeboy View Post
can anyone tell my about these types of loans
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Old 08-25-2007, 05:23 PM
 
Location: California
510 posts, read 2,969,267 times
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I'm not sure I've ever seen a 40 or 50 year mortgage with a 10 year I/O period... wouldn't be terribly logical to take a higher rate when the amortization schedule won't effect the payment due to it being interest only.

For most of the programs, the term isn't 40 or 50 years, the term is 30 years. They will however have a 40 or 50 year amortization applied. Essentially creating a payment schedule based on paying it off in 40 or 50 years, with a balloon payment at the end of 30 years. Essentially you just pay less principal in the beginning, and mostly interest... the only benefit of such a loan is a lower payment.

For example, a $300,000 loan amount at 6.5% would have a payment of $1896 using a 30 year amortization. The payment would be $1756 using 40 years, and $1691 using 50 year. The interest only payment would be $1625. So you can see the 50 year loan is nearly an interest only, and you will pay very little to principal within the first 10 years...although you will pay some...
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Old 08-25-2007, 09:20 PM
 
Location: Tucson
42,837 posts, read 77,141,560 times
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Quote:
Originally Posted by wadeboy View Post
can anyone tell my about these types of loans
Oh, boy... so these are for real already... Read somewhere (haven't verified it) that in Japan they used to go up to a 100!

It means that if you stay in this house until full amortization (if you make it... ), you'll pay 3 or 4 times what the house cost in the first place. On a 30-year loan it's more like 2+ times.

Here's a calculator that'll give you a good idea: How much will my mortgage payments be?

Look at tables/all rows and see how much interest you'll have paid at the end. Hmm, I just tried that and it turns out National City Mortgage is not up to the 50-year trend yet... Good thing they're not. I consider them a fairly reputable lender - as good as they're allowed to be anyway.
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Old 08-26-2007, 01:07 AM
 
Location: California
510 posts, read 2,969,267 times
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They have been around for some time. They are a better loan than an interest only loan, as you actually pay principal.

It's quite normal for people to pay 2-3 times more in total payments than what they bought it for. Most people get a 30 year loan because they can't afford to pay it off in 10 years. Without long term loans, 90% of buyers would be renters.

If you take $100 and throw it into savings for 30 years... wouldn't you expect to get triple your investment back?


Quote:
Originally Posted by sierraAZ View Post
Oh, boy... so these are for real already... Read somewhere (haven't verified it) that in Japan they used to go up to a 100!

It means that if you stay in this house until full amortization (if you make it... ), you'll pay 3 or 4 times what the house cost in the first place. On a 30-year loan it's more like 2+ times.

Here's a calculator that'll give you a good idea: How much will my mortgage payments be?

Look at tables/all rows and see how much interest you'll have paid at the end. Hmm, I just tried that and it turns out National City Mortgage is not up to the 50-year trend yet... Good thing they're not. I consider them a fairly reputable lender - as good as they're allowed to be anyway.
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Old 08-26-2007, 06:40 AM
 
Location: North Raleigh
820 posts, read 2,502,619 times
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Quote:
Originally Posted by UseJeff View Post
They have been around for some time. They are a better loan than an interest only loan, as you actually pay principal.

It's quite normal for people to pay 2-3 times more in total payments than what they bought it for. Most people get a 30 year loan because they can't afford to pay it off in 10 years. Without long term loans, 90% of buyers would be renters.

If you take $100 and throw it into savings for 30 years... wouldn't you expect to get triple your investment back?
I have a decent salary, want to buy well below my debt to income ratio, and still can't see myself in a 15 year mortgage. 30 years isn't a hardship, it's just expected. I am sure many never make it through the whole term without selling to cash out all that equity and appreciation for the nice golf course retirement home.... now at that point a 15 year or less loan will be for me.
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Old 08-26-2007, 08:06 AM
 
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I here there are alot of these loans out in california.
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Old 08-26-2007, 08:12 PM
 
Location: Tucson
42,837 posts, read 77,141,560 times
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Quote:
Originally Posted by wadeboy View Post
I here there are alot of these loans out in california.
It figures... since the jumbos became so expensive.
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Old 08-26-2007, 08:24 PM
 
Location: Tucson
42,837 posts, read 77,141,560 times
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Quote:
Originally Posted by UseJeff View Post
If you take $100 and throw it into savings for 30 years... wouldn't you expect to get triple your investment back?
There's a teeny-tiny difference here. You throw into savings your hard-earned money, whereas your loan is nothing but numbers entered into the computer for which you pay through your own nose while they keep printing more worthless pieces of paper and enter more numbers created out of thin air into more computers (aka deliberate inflation). And as you might've noticed, it doesn't keep up with your salary, does it. Come to think of it, there isn't even much printing involved nowadays... cashless society it is.
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Old 08-27-2007, 12:02 AM
 
Location: California
510 posts, read 2,969,267 times
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Quote:
Originally Posted by sierraAZ View Post
There's a teeny-tiny difference here. You throw into savings your hard-earned money, whereas your loan is nothing but numbers entered into the computer for which you pay through your own nose while they keep printing more worthless pieces of paper and enter more numbers created out of thin air into more computers (aka deliberate inflation). And as you might've noticed, it doesn't keep up with your salary, does it. Come to think of it, there isn't even much printing involved nowadays... cashless society it is.
Isn't the money they lend you earned by them as well? The only difference is that they are highly successful investors, and have tons of money to lend. There are many singular investors who own loans they bought on the 2ndary market, and simply pay a company like Countrywide to service them.

All I wanted to point out is that people don't give money away for free. It's only logical that you have to pay for money you don't have in the form of the finance charge of a loan. It's exactly the same as us investing our "hard earned" money into the market or a savings account.
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