What kind of help is really available to people with “interest only loans”?
Question by rosesbloom7: What kind of help is really available to people with “interest only loans”?
On TV I have seen people that went to their lender, and have received inadequate information, and may lose their home.
Interest Only Home Loans
Best answer:
Answer by In the Kitchen
Go to your lender first and discuss the options they are offering. They don’t want to be stuck with your house.
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Tags: ARM, Home Loan, Interest Only Loans, Interest Payments
“Wages only jobs.”
They help you to stay in debt forever. They also help the lender have a steady income. You don’t provide a lot of information, so you can’t expect good answers. What is the loan for? What are the conditions? What is your status? Ask the lender for complete information, then as an independent financial adviser to evaluate your situation.
An interest only home loan is nearly always a poor choice, since nothing paid is used to reduce the principal amount owing. If the loan in question is an ARM and qualifies under the recent agreement hammered out between government and lenders, one may be able to keep the current interest rate where it is for up to five years.
That being said, you’re STILL only paying the interest on the loan, and paying NOTHING towards principal.
Interest only loans are the best type of loan to have IF you are investing the incremental cash flow in something that has a higher rate of return than what you are paying on the loan. You suggest you need “help”. If you can’t handle the interest payment today, you’re certainly not going to be able to handle the interest plus amoritzed principal.
In any case, you have to start with your lender. Lenders do NOT want to foreclose on property if there is something else reasonably available to them. But ultimately it is their decision. That’s what you signed up for when you took the loan.
The borrower is also part of the problem for getting a loan that they did not do enough research. They should have had some idea of what they were getting.
Like everything else, its “buyer beware.”
The only help that they may get is not having the loan reset to the higher rate.