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Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
Interest Only Mortgages
There has been a great deal of talk lately, among real estate investors,
about interest only mortgages. With interest only mortgages, you essentially
have very low monthly payments, and you get to write off the interest on
your taxes.
However, what most people don't realize is that what you are essentially
doing with an interest only mortgage, is that you are buying now, and paying
a great deal later on. Before you do this, you need to really understand
what interest only mortgages are really all about. First, note that if you
are paying interest only, and none of the principle, you won't be building
any equity. For this reason, interest only mortgages are only good financial
tools to use for certain situations.
A mortgage is basically a a loan from a financial institution, where you
promise to pay the lender, and if you don't pay the lender, as promised,
the property is used as collateral on the loan, meaning that it can be foreclosed
on and sold away to settle the debt. So, basically the mortgage lender is
buying the property, and you are purchasing it from them, on time payments.
But, if you are only paying interest on the loan, you are not paying the
loan back. This means that the mortgage lender continues to own the property,
and all equity in the property as well, if any.
With an interest only mortgage, you can get in to a great deal of debt in
a very short period of time. Interest is calculated on the amount of money
still owed on the loan - so if you are never paying off any of the principle,
the interest remains at 100% of the original interest amount. It never reduces.
Interest only mortgages are traditionally offered only on ARMs (Adjustable
Rate Mortgages), but they are also offered for fixed rate mortgages as well.
Mortgages loans generally have terms of anywhere from 15 to 30 years, but
the interest only mortgage payments never run for that amount of time. You
will typically start paying on the actual principle amount in five, seven,
or ten years. However, with the interest only period over, you will be paying
a great deal of money each month, because you will be paying interest and
principle...just because the interest only period ended, the interest did
not!
Again, interest only mortgages do have their place in the world of real estate
investments. If you wanted to purchase a new home, with a low downpayment,
but you didn't intend to stay in that home for more than ten years, an interest
only mortgage may be a good alternative for you. Just remember that you won't
be building any equity on the home, so when you do sell it, you won't see
much profit from that sale.
An interest only mortgage is also ideal for investors that buy properties
undervalue, and plan to turn the property over fairly fast as well.
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Articles
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Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
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