Friday, October 12, 2007

Interest Only Loans How they apply to you

I attended a class the other day and to say I am a conservative would be accurate. I find myself being challenged with the new financing being offered to home buyers however I did learn something I did not think of. An interest only loan is simple interest! And typically a HELOC, even though it might adjust, it too is a simple interest loan.

One of the greatest tools for making money for an investor is COMPOUND INTEREST, or interest charged upon interest. When interest is compounded it will be more than that simple and when we look at that "GOOD FAITH ESTIMATE" and it has that huge interest charge, that is where it shows up.

Simple interest is just that, simple. In short a $100,000 loan has a 7% interest rate and the annual interest charge will be $7,000. So an interest only first mortgage might be a good tool for buyers of homes in Denver, in that there is a interest savings.

Can we do this?
Probably if you have 3 things:
Verifiable Credit
Verifiable Income
Verifiable Assets

Now the next thing is: can we use the equity in our home to take advantage of the current Denver Real Estate market? I think so but each client has to consult their advisors to see the ramifications of a particular situation.

So, if this kind of service could be valuable to you or your friends, put my 22 years of experience to work for you, learning about your new home town! Whether it is Highlands Ranch, Lone Tree, Littleton, Castle Rock, Centennial, Englewood, Parker, Elizabeth, Larkspur, Franktown, Kiowa, or anywhere in metro Denver Colorado, we offer real estate advice, properties for sale, multiple listing service, property listings, mls, all available at Drop me a note to

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