Can't Afford the Big House, or Can You?
Exploding growth in the mortgage loan segment has put the
interest only loan in a huge category all it's own. Up from the
first part of the century, the interest only loan is now
cornering a near one-fourth of the mortgage loan market. That
kind of growth is almost frightening to even the most
experienced lender. The benefit of the interest only loan is
that the consumer is eligible to buy a much bigger house, than
with a standard mortgage. Can you imagine the possibilities say
four to five years from now, when many of these loans come due
in paying the interest and the principal, if our economy isn't
still a thriving bustling place? The interest only loan and
the bigger house are great, if you're certain in a given period
of time that you'll be able to afford a higher mortgage payment.
But is anything guaranteed and given in this day and time? The
home owner that borrows with the interest only loan to be able
to afford the bigger house has a bigger problem than just a
mortgage note that may be beyond their means to pay, they
generally live beyond their means elsewhere. Those bills will
come due much faster than the interest only loan collector. The
borrower that uses the interest only loan as a way to bridge the
gap between my tomorrow salary, and the reality of today's
salary, will probably still have this same habit, when
tomorrow's salary becomes today's. This idea is great, if you
happen to be a young professional with a great future, and you
work for a company that's willing to buy your home at the end of
5 years, when you're ready to move up the corporate ladder, but
these deals are few and far between. Most of the interest only
loan borrowers don't fall into this market segment. They're in
the one that will be trying to find a way to pay a huge mortgage
payment in about 5 years. The big house, the picket fence, and
the great job are wonderful goals and dreams to have. You just
need to make sure before you step onto the dream cloud, that
you've got a net beneath you!