Word: loans
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Still, not all trends are worth following. Although specialty mortgages often have seductively low introductory interest rates, the long-term costs may be more than you bargained for. Here are some loan options to consider--very carefully...
...mortgages. But financing 100% of your home exacts some extra costs, like private mortgage insurance, which most lenders require for a down payment of less than 20%. On top of a larger than average down payment, you may also be saddled with a premium--generally about 0.5% of your loan--during the first year of payments. But the biggest danger is that you may end up owing much more than your home is worth. That's especially true in the red-hot real estate markets along both coasts. "These loans are a losing proposition," says Dean Baker, a co-director...
...LOANS OF A LIFETIME You thought 30 years was a big commitment, so how about 40 or even 50 years? Ultra-long-term loans stretch your fixed-rate payments over nearly a half-century. Extending your loan 10 or 20 years would lower your monthly payments, but you may not save so much as you would expect. Let's say you had a $200,000, 30-year mortgage at 6% interest. Your monthly payment would be $1,199. Since lenders consider a 40-year mortgage a bit riskier, they usually charge an additional 0.25% in interest. So that...
...YOUR BEST INTEREST? Taking out an interest-only loan means that at least initially, all you're paying back is interest; you're not making a dent in the principal until after the interest-only introductory period, typically five or 10 years down the road. So if you bought a $300,000 home, put down 10% and signed a 5.75% interest-only adjustable-rate mortgage, you could expect monthly payments of $1,294. But interest rates are low now. If after five years they inch back up to a more normal 8.75%, you would find yourself staring...
...Jung says he's resisted the pressure and has made no changes to his production. Still, the heat caused some of his financing to dry up, forcing him to raise additional funds in a rather unorthodox manner: in return for a loan of about $20,000 from one backer, he says, he put his kidney?yes, his kidney?up as collateral...