Question by veron: How good is an interest only refinance loan fixed for 7 or ten years at 6.125 interest rate?
We bought a home in FEBRUARY of 2005 the payments are pretty high we have a fixed 30 years mortgage at 6.125 and we are trying to reduce our mortgage payments, we are being offerd a 7 years fixed at 5.37 and a 10 years fixed at 6.125 both which is interest only which is the best refinance plan or should we stay with our present mortgage of 6.125 for 30 years.
Answer by The 7th Son
W/ your conventional loan, you are building equity, be it ever so slowly. Some of each payment goes to owning the home.
Interest only loans are a financial institution’s way of renting you your home. At the end of the 7 or 10 years, you owe just as much on your home as you do now. These sound soooo good, but are only ways to shovel people into homes where banks have no risks and all rewards.
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