Card Debt - Interest Only Loans
April 21st 2006
Rates on 30-year mortgages moved up again this week to their highest
point in nearly four years. The rising rates may cause home prices to
fall. As rates rise, so do the monthly payments to potential
barrowers. This may cause home sellers to lower their price.
Frank Nothaft, Freddie Macís chief economist said ďAs a result of higher
mortgage rates, housing market activity is beginning to slow."
Associated Press writer, Jeannine Aversa, says that mortgage rates rose
as Wall Street investors fretted that inflation might pick up. Their
worries were fanned by government reports released earlier this week
showing big increases in both wholesale and consumer prices for March.
But what about credit card payments? This year Credit Card Issuers were
required to double their minimum payments from 2% to 4% of the loan
balance. The Credit card companies actually fought this rule, but
lost. They make more money stringing purchasers out for longer periods
Some experts believe interest rates will be increasing again either
later this year or next. This may affect both mortgage interest rates
and the rates credit card companies charge. It may be a good time to
consolidate credit cards in to a 30 year mortgage.
There are many home loans to choose from. One popular type of mortgages
is the interest-only (IO) loan. There are various type of IO loans as
well. Even Investors will use these loans to increase their buying
power, due to the lower payments. They are especially popular with
people that donít plan on staying in a house for longer than 5 years.
Interest only loans have a specific term. Some IO loans will include a
balloon payment after 10 years where the entire principal is due at that
time. Other IO loans are converted to a fixed or adjustable rate
mortgage after a specified period, where both interest and principal are
made in payments for the remaining term. For instance, a barrower may
get a IO loan for 10 years, but at that point the loan converts into a
traditional loan for the remaining 20 years.
If interest rates continue to rise, this may be the year to get rid of
your credit card debt. Ask your loan consultant if an interest only
loan is right for you.
By Dan Wilson
Keywords and misspelling: enterest investmint investing intesters
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