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In reply to the discussion: Is Buying a House Still the Best Way to Build Wealth? [View all]Lurker Deluxe
(1,029 posts)3. lol
"through a no-money-down, interest-only loan"
In other words ... renting. You will never pay off the principal of a loan with an "interest only loan". Taking a gamble like this is a sign that you are hoping the market will continue an upward trend and you can sell in 5 years or pull out equity because of gain in value.
"It prevented them from pulling any equity out of the house"
They expected equity without any investment, the true cause of the housing bubble. They had no intention of making this their permanent home.
But hey ... a 490K "starter home".
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to build wealth for the lender from the thousands of almost pure interest payments.
Sunlei
Feb 2015
#1
mortgages are front loaded for interest. the majority of the first many years are interest payments.
Sunlei
Feb 2015
#13
did that but put no money down at all. Lenders handed out mortgages like candy & I took advantage!
Sunlei
Feb 2015
#54
I'm glad you got a good deal. The neighborhood would have changed either way, so it's good
merrily
Feb 2015
#23
They would have had no equity with that price drop even if they had put 20% down.
Gormy Cuss
Feb 2015
#24
I wouldn't sell a home that is paid for. Rent it for retirement or general income.
Sunlei
Feb 2015
#42
The strategic reason to buy property with interest-only loans is that you don't tie up your cash
Gormy Cuss
Feb 2015
#26
It is still the best way, they are not making any more land. Well they are but not on that large of
ChosenUnWisely
Feb 2015
#31
like everything else the housing market's been "financialized": suburbs aren't built for housing for
MisterP
Feb 2015
#55
If they're at that kind of place in their lives where they can manage to do that without issue, then
MADem
Feb 2015
#68
There really are so many factors that can weigh heavily for, or against, buying a home
Lex
Feb 2015
#51
Probably is at least an effective defense against poverty in old age...If you can pay it off
TheKentuckian
Feb 2015
#90
It all depends on the circumstances. We encouraged our daughter and son-in-law to buy
pnwmom
Feb 2015
#91
How is home owership supposed to make up for "dwindling pensions and stagnant wages"
Matariki
Feb 2015
#92