Posted by TD_CA on 10/12/05 1:21pm
Msg #70037
Signing
I had a signing last night that I had an uneasy feeling about. This couple got a HELOC to get funds to purchase another home. The problem I had and the wife was questioning was that their lender signed them up on a 25 year "interest only" payment loan and in 25 years a balloon payment is due. This was a first for me! I figured that maybe interest only for maybe 2 or 3 years interest only but not 25 YEARS! I had to bite my tongue (ouch!) - I hope they cancel this loan.
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Reply by Anonymous on 10/12/05 1:23pm
Msg #70039
They are probably going to invest in property and sell it way before the 25 years is up... that is what many do is keep it, let the value increase then sell. The interest only is an advantage since they will probably pay it off way before the term is up.
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Reply by Joe_PA on 10/12/05 1:29pm
Msg #70044
On a financial train of though this may be a good loan if they hope to flip the property within a few months.
Just a thought
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Reply by Paul_IL on 10/12/05 1:31pm
Msg #70045
TD,
Most likely this is for an investment property and the borrowers are looking for cashflow. They could also be planning to rehab the property then they will most likely refi the home at its new value and then payoff the equity line so they can use the money again.
Biting tongue is good when you have limited experience in Real Estate
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Reply by TD_CA on 10/12/05 1:38pm
Msg #70048
Thanks for the input! I feel much better!
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Reply by B__CA on 10/12/05 2:26pm
Msg #70056
You never know what kind of financial situation the borrowers are in at the moment. I had one where the lady was so happy to get this lower interest rate, 15.99% I had to keep my mouth shut. Later during the signing she told me she was paying 24.99%. This was a mobilehome and both her and her husband had been off work quite a bit over the year. This did benefit them.
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Reply by TitleGalCA on 10/12/05 9:09pm
Msg #70131
You have to hope that the borrowers are smart about their investments. As another poster said, my guess is that they will only hold the property for a short period. Continue biting that tongue, TD...not much else you can do - or should do.
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