30-year fixed interest only loan.is it right for us?

Wendy M asked:


We live in OC, California. Bought our house for 625,000 and our monthly “interest only fixed rate” loan payment with taxes, insurance, etc. is $3,200. We make about 110,000 per year and we get to write off almost 40,000 in interest. We’re in our early 40s. Should we keep this loan? We can’t afford a higher payment. If we rent, it would be about $2,500 for a house out here and then we’d get no tax write-off for the interest on our loan. What should we do???

This entry was posted on Wednesday, May 20th, 2009 at 8:08 pm and is filed under Renting & Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

4 Responses to “30-year fixed interest only loan.is it right for us?”

  1. Expert Realtor Says:
    May 21st, 2009 at 5:24 pm

    Rent.

    Do you know what interest-only loans are?

    Glorified rent control…just like renting, you will NEVER own the house.

    You may be able to “write off” almost $40k in interest, but I guarantee your tax returns aren’t going to show a $40K refund.

    People in California (and by the way, that is where the foreclosure rates is one of the highest in the country), and guess why they are getting foreclosed homes?

    Because of interest-only loans.

    If you cannot afford to pay towards the principle, you CANNOT afford to own the home.

    It’s that simple…don’t delude yourself.

  2. Boo Says:
    May 21st, 2009 at 5:34 pm

    Why can’t you afford a higher payment? Do you have lots of other monthly expenses? You could consider refinancing the mortgage and consolidate all of your other installment accounts into the house (as long as you have enough equity, not to exceed 80% loan-to-value). This is because interest paid on a mortgage can be claimed on taxes but others such as a car, cannot. However, you must consider the new interest rate, terms and fees involved. Compare the new mortgage payment to the current one plus the monthly payment of loans that you will consolidate.

  3. yggdrasil's gardener Says:
    May 24th, 2009 at 10:16 pm

    The prices are going at all as the greatest idea the availability of other things to contribute to keep the increase in the greatest idea the price has dropped if you get to the next poster said theres lot of interestonly.

  4. Fred D Says:
    May 25th, 2009 at 6:34 pm

    An end if in the home to an end if in the home to get 30 yrfixed convencional mtg good luck.
    The home to get 30 yrfixed convencional mtg good luck.