| The old adage says Haste makes Waste, and | | | | interest only mortgages have one main point. |
| caution is your only friend. How true such a | | | | The payments are pretty low during the term |
| proverb is when it comes to the world of | | | | of the payment, but that is simply because |
| personal financial planning. Caution means | | | | the overall liability is never going down. |
| that you stop and look at all options before | | | | Other than that, this mortgage product really |
| making any decisions in order to ensure that | | | | shouldn't be a regular item of consideration |
| more often than not the result is a sound | | | | in your financial planning portfolio. |
| decision with a positive outcome. This step | | | | |
| is almost mandatory when dealing with issues | | | | The interest only mortgage offers little in |
| of financial planning, 401(k)s, and future | | | | the way of tax deferred savings when compared |
| money needs like retirement funds, etc. Poor | | | | to the bigger products like IRAs, MSAs, and |
| financial decisions can result in | | | | even 401(k)s. Sure the interest is tax |
| catastrophic consequences like late payment, | | | | deductible, but not at a one-to-one ratio. |
| a deteriorating credit rating and even | | | | Even SEPs for the self-employed individual |
| bankruptcy. | | | | can have a one-to-one ratio of tax savings. |
| | | | |
| When investing in real estate for short term | | | | Over the long-term financial planning |
| purchases, one of the options you may be | | | | picture, if you were to consider an interest |
| considering is an interest only mortgage. | | | | only mortgage in comparison to a regularly |
| These can be a tricky investment and so you | | | | amortized mortgage you would see that when |
| may want to consult with your financial | | | | the regularly amortized loan is paid out, |
| advisor, before entering into a mortgage of | | | | there is still a long line of payments to be |
| this type. And, since it really can't be | | | | made on the interest only loan. The amount of |
| considered a piece of your investment | | | | savings could be quite substantial if you |
| portfolio, a will more than likely be part of | | | | consider the time value of money. Time value |
| a business venture or investment. This is | | | | is easy to understand once you learn it. The |
| where the looking at all the options really | | | | basic concept is that the dollar is worth |
| comes into play. An interest only mortgage is | | | | more today than it will be worth tomorrow |
| not a good financing option when you are | | | | (history seems to confirm this). So money put |
| looking at purchasing a piece of property for | | | | in savings today, will ultimately be worth |
| a long-term investment purpose or are going | | | | more than money you start saving in ten or |
| to claim capital gains on the property. | | | | fifteen years. This is why financial planners |
| Interest-only mortgages are for quick profit | | | | urge folks to plan for retirement at such an |
| transactions. You get in, and you get out. No | | | | early age instead of waiting until age 35 or |
| hanging around in the middle. In. Out. Fast. | | | | 40 to start saving for the future. |
| Easy. Why do I say that? Because interest | | | | |
| only mortgages do not allow for an increase | | | | While an interest only mortgage may seem like |
| in value to you, there isn't an equity | | | | a viable option to you, be wary and consider |
| growing measure included so you can't get | | | | all the other possibilities. Chances are a |
| more out of the transaction, really; and, | | | | reputable financial planner will have other |
| your investment debt never decreases. | | | | options that benefit you more in the long |
| | | | run. |
| Short-term implications and considerations of | | | | |