My understanding was that as long as you make at least the interest only payment, you do not run the risk of neg amortization. If you continually make the minimum payment, then you will owe more on the loan than what you initially borrowed. Is this correct?
Quote:
On 2005-11-13 22:54, yankeept wrote:
My understanding was that as long as you make at least the interest only payment, you do not run the risk of neg amortization. If you continually make the minimum payment, then you will owe more on the loan than what you initially borrowed. Is this correct?
You are correct in what you say. If you make the interest only payment for up to five years no matter what you will only owe the principal amount. It is only when you pay the minimum payment that your principle increases.
I have heard of people getting charged back the YSP also, but rare. Normally the Loan officer has to be abusing it, and they have to catch them doing it on purpose (refing someone over and over with now points over 1 year)
YSP is what the bank pays us to do the loan, and it raises the interest rate the more money we get paid (normally 1% unless it is a pay otpion arm) and the YSP is greater with a prepay. So your lender has incentive (normally very little though) to put on a prepay. Although some loans (bad credit pay options arm) require a prepay. If you are a "good" client prepays can be eliminated, and is a great idea not to have them when flipping! GL
As in some other countries, as a non-citizen I had to set up a company (their equivalent to LLC) to hold title to properties. Wages are low enough, and with several units, I hired my own employee to lease/manage units.
Hello EuroInvestor, I am also interested in buying a rental investment in Belgium, Poland or some place in Europe. Can you refer me to some web links to get me pointed in the right direction?
Any one out there use a pay option arm?
Well they are appreciating a lot here in california.
This product will be less attractive as the Fed continues to tighten
Also the neg. am is a bad deal that we don;t want to intorduce
My understanding was that as long as you make at least the interest only payment, you do not run the risk of neg amortization. If you continually make the minimum payment, then you will owe more on the loan than what you initially borrowed. Is this correct?
Quote:
On 2005-11-13 22:54, yankeept wrote:
My understanding was that as long as you make at least the interest only payment, you do not run the risk of neg amortization. If you continually make the minimum payment, then you will owe more on the loan than what you initially borrowed. Is this correct?
You are correct in what you say. If you make the interest only payment for up to five years no matter what you will only owe the principal amount. It is only when you pay the minimum payment that your principle increases.
Laurie
[addsig]
I have heard of people getting charged back the YSP also, but rare. Normally the Loan officer has to be abusing it, and they have to catch them doing it on purpose (refing someone over and over with now points over 1 year)
YSP is what the bank pays us to do the loan, and it raises the interest rate the more money we get paid (normally 1% unless it is a pay otpion arm) and the YSP is greater with a prepay. So your lender has incentive (normally very little though) to put on a prepay. Although some loans (bad credit pay options arm) require a prepay. If you are a "good" client prepays can be eliminated, and is a great idea not to have them when flipping! GL
Do you do everything through management companies?
As in some other countries, as a non-citizen I had to set up a company (their equivalent to LLC) to hold title to properties. Wages are low enough, and with several units, I hired my own employee to lease/manage units.
Hello EuroInvestor, I am also interested in buying a rental investment in Belgium, Poland or some place in Europe. Can you refer me to some web links to get me pointed in the right direction?