Friday, August 05, 2005
No interest in interest only
In economic parlance I tend to be 'risk averse' when it comes to personal finance so the very act of buying a house in the Bay Area was enough to make me a bit nervous. We've tried to mitigate this concern by locking in a payment schedule that removes some of the variability from our future years at 930 Faxon. Hence our 30-year fixed rate mortgage.
Why would I chose this particular loan at a time when banks are offering more flexible and consumer-friendly lending vehicles? Well, interest rates are at historical lows and I figure best case is to manage to a monthly payment we can afford at our current salary levels.
Most folks ain't so conservative. When we were soliciting loan proposals from various lenders one provider sent me a monthly cost estimate showing the amount I'd should expect to pay with my 'interest-only loan.'
"Uh CJ, I said we weren't interested in interest-only," I told the broker.
"Oh yeah, I forgot to change it. Almost everyone I'm serving these days is doing interest only."
Gulp.
Why would I chose this particular loan at a time when banks are offering more flexible and consumer-friendly lending vehicles? Well, interest rates are at historical lows and I figure best case is to manage to a monthly payment we can afford at our current salary levels.
Most folks ain't so conservative. When we were soliciting loan proposals from various lenders one provider sent me a monthly cost estimate showing the amount I'd should expect to pay with my 'interest-only loan.'
"Uh CJ, I said we weren't interested in interest-only," I told the broker.
"Oh yeah, I forgot to change it. Almost everyone I'm serving these days is doing interest only."
Gulp.
