Interest-Only Loans Can Buy More House and More Trouble
They're spreading like wildfire--interest-only mortgages appear to be the panacea for rising home prices and the incomes that can't quite catch up. You can buy "more house" and have a low mortgage payment and a big tax deduction. Who wouldn't want one, right?
Well, a large number of consumers are getting into these loans when they shouldn't. Interest-only mortgages work well for some individuals and are dangerous for most others, yet the number of interest-only loans is rising rapidly.
Take a look at San Diego. In 2004 almost half of the mortgages required interest-only payments in the first few years according to a study done by LoanPerformance, a San Francisco--based real estate information service.
Could this have something to do with the housing market? You bet it does. Are home prices rising faster than salaries and incomes? They sure are. So how is one supposed to afford a house in such an expensive housing market? You guessed it--an interest-only loan.
Interest only-loans were originally aimed at more sophisticated investors who wanted to leverage their income by re-directing what would have been the principal portion of their payment to higher yielding investments that exceed the rate of their home appreciation. These types of investors typically have more assets and financial discipline than most and therefore aren't as likely to get in as much trouble with such a loan.
Today, interest-only loans are being utilized by borrowers who are trying to leverage debt. What they are doing is getting more debt for their buck; they're borrowing more money but keeping their payments low (initially) in order to compete with other buyers in sellers' markets. Here are some of the potential dangers that face such borrowers:
? If the principal balance isn't being reduced, than no equity is being built, and if home prices are stagnant during the interest-only period and the borrower needs to sell, he'll need to be able to pay sales costs out of whatever equity there is in the house, if there is any. Remember, mortgage amortization is in the borrower's control, appreciation is not.
? If there's a downturn in home prices, the borrower could end up "upside down," meaning the mortgage balance on the property could end up being greater than the property's market value. In this case, the borrower would be responsible for sales costs and the remaining mortgage balance which could lead to foreclosure.
Interest-only mortgages make sense for borrowers:
? who have seasonal incomes or earn commissions and/or bonuses and have a desire to pay on the principal when it's convenient.
? upwardly mobile individuals who expect to earn more in a few years and want to buy "more house" early on rather than later.
? who intend on investing their cash flow in higher yielding investments or paying down high-priced debt.
Make sure you know what you're getting into with an interest-only loan. Consult with your mortgage broker or lender to know what the possible repercussions could be, and be sure you're getting the loan for the right reasons. Eventually, you want to own your home, and it's better to be planning on that sooner than later.
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Check Cashing Services
Commercial banks offer a number of services to their customers, but in recent years, many people have chosen to use check cashing services instead of banks. Check cashing services are an alternative service sector to traditional banking service.
This service has proven to take over the role of traditional financial institutions such as banks and credit unions. The service is offers various options. Customers can bring any type of check to cash, including personal checks, payroll checks, government checks, insurance checks, tax Refund checks, settlement checks, and Social Security checks.
The success of these alternative financial services is due to many factors. Partly, it is due to its ability to compose products and operations to meet the needs of households with little or no month-to-month funds.
Moreover, this service is beneficial to customers as well as the financial institutions. It is a "win-win' situation for both the...
Financial planning > Check Cashing Services
Paw Palace, a Luxury Pet Boutique Launches an Online Dog Gift Registry for Parents Who Want to Plan Special Occasions for Their Pampered Pooch
Red Bank, NJ (ContentDesk) May 12, 2006 -- Paw Palace, a luxury pet boutique, has recently redesigned their shopping website and now offers a trendy, new service - a gift registry for the pampered pooch. With more people from coast to coast lavishing pets with gifts during birthdays, puppy showers, holidays and other special doggie occasions, pet parents nationwide can now help ease the guess work out of what to get their pooch at the click of a button!"When Paw Palace was launched on the web two years ago, we had a few requests for this service," states owner, Dana Ujobagy, "However, when we opened our flagship location in Red Bank, NJ and had more walk in customers tell us how they were planning a puppy shower or a dog's birthday and were having these elaborate events at halls, I didn't realize how much the trend was taking off. But what really got the ball rolling was when we had a few customers come in and say they were invited to one of these parties but had no idea what to get...
Paw Palace, a Luxury Pet Boutique Launches an Online Dog Gift Registry for Parents Who Want to Plan Special Occasions for Their Pampered Pooch
Financial planning > Paw Palace, a Luxury Pet Boutique Launches an Online Dog Gift Registry for Parents Who Want to Plan Special Occasions for Their Pampered Pooch
Military payday loans! The before pay check financial fiasco, is history now
Working under the most prestigious service of the country ? military ? and still struggling with ends to meet! Are finances crumbling on you? And you thinking of another job? Will it easy to maintain two jobs? How would it affect your life? Is there a guarantee that the second job will solve the financial crunch? Military payday loans can offer respite from these queries, if your cash problems are temporary. ?Temporary' is the term to concentrate when you are applying for military payday loans. Only small lived financial problems can sanction military payday loans. Urgent medical needs, several bills, and unplanned expenses which are not covered by paycheck ? military payday loans are normally meant for these ?emergency' situations. Military payday loans are not very different from usual payday loans.
Also known as cash advance loans, they are offered to qualified military personnel on their ability to repay the loans. For military payday loans, a borrower has to give a post dated...
Military payday loans! The before pay check financial fiasco, is history now
Financial planning > Military payday loans! The before pay check financial fiasco, is history now
ConsumerBase Announces New Chief Financial Officer
Evanston, IL (ContentDesk) April 14, 2006 -- Today ConsumerBase announced the addition of Colm Ronan as the companys new Chief Financial Officer. Ronan will be in charge of managing all aspects of the companys finances for both the U.S. and the U.K.A native of Ireland, Ronan has experience working in finance and accounting in that country as well as in the United States. Before joining ConsumerBase, he was Vice President of Finance at DIMS Organizing Print of Lisle, IL. Prior to that he was Financial Controller in the Chicago office of London-based Radius Solutions.ConsumerBase CEO, Larry Organ, cited Ronans previous work for technology companies and his international experience as major factors in the decision to bring him onboard. Colm has a technology background as well as a wealth of experience in international finance.
These are attributes that we needed for this position. I am confident that Colm is going to make a sizable contribution to this organization in short order ...
ConsumerBase Announces New Chief Financial Officer
Financial planning > ConsumerBase Announces New Chief Financial Officer
Retirement or Financial Freedom?
In the past most people never retired. They died. The average life expectancy was much less than it is these days, and there were no financial planners around to help people save up enough to quit work. As recently as the 1960's, if you did manage to save up enough money to retire, you'd be lucky to live another 5 or 6 years before you kicked the bucket. This made financial planning for retirement a little easier because you really only needed enough income for a few years.Nowadays, if you retire, chances are you can live forever.
Well, it can seem like forever?especially if you haven't saved up enough money. It is a daunting task, attempting to set aside enough money to supply an income for 25 or 30 years, in the 15, 10 or 5 years you have before you retire. We say this because most people don't get really serious about their retirement planning until they hit 50?and realize they had wanted to quit work at 55! This is the standard model that has been followed since we began living...
Retirement or Financial Freedom?
Financial planning > Retirement or Financial Freedom?
COMPUOFFICE SOFTWARE INC. ANNOUNCES THE BEST VALUE IN WEBSITES FOR INSURANCE PROFESSIONALS AT ONLY $99 PER YEAR.
(ContentDesk) October 3 2003--CompuOffice Software Inc., a North American leader in the field of independent multiple company life insurance comparison and analysis software, is introducing best value website service for individual life insurance advisors, agents and brokers.
This best value service includes full web sites, e-mail facilities, and real-time, on-line life insurance comparisons.
The annual all-inclusive price is set at ONLY $99 per year for individual life insurance advisors, agents and brokers who subscribe to the LifeGuide? Professional Software in Canada or to the CompeteUS? software in the United States.
At the all inclusive price of only $99 per year for the service, individual life insurance advisors, agents and brokers can now easily afford to have their own individual, professional and independent websites for the lowest, and most reasonable rate.While the price, at only $99 per year, is the lowest in the market, the service package is...
Financial planning > COMPUOFFICE SOFTWARE INC. ANNOUNCES THE BEST VALUE IN WEBSITES FOR INSURANCE PROFESSIONALS AT ONLY $99 PER YEAR.