First off, who saw that Super Bowl coming? If you did, I hope you put your money where your mouth is. Wow, Seattle’s Defense is awesome! Being a 49er fan, it just highlights how well the Niners played in the NFC Championship game. Congrats, Seattle. The bad news is that they’re one of the youngest teams in the NFL.
Now, back to real estate. You know, I never really had a problem with interest-only loans. In fact, I always though that they were a pretty practical loan vehicle for people needing a little help to qualify. Interest-only loans are loans that charge “interest only” for a fixed amount of time– five, seven or 10 years. After that, the loans convert to an adjustable rate loan . The initial rate is lower than the prevailing 30-year conforming. The rational behind them is that the borrower would be able to get into the home and have the ability to refinance during the interest only period. Sure, they contributed to the crisis–but what loan didn’t? The interest-only loan isn’t some wacky negative amortization deal, and have you seen an amortization schedule for a 30-year fixed loan? It’s almost interest only for the first five years anyway.
Since the new Dodd-Frank regulations, interest-only loans are not considered qualifying loans–loans that can be sold on the secondary market–so lenders are no longer offering conforming, interest-only. BUT, for high net-worth customer, banks are offering jumbo interest-only loans, and keeping the loans on their books until refinanced or payed off. So, if you are in the Santa Barbara real estate market, there’s a good chance that the interest-only loan could be available to you. It’s something you should check out.
Now, Spring Training is right around the corner. So is The Masters.