Is an interest only loan a good thing when renting out a home?
My home has a $167k loan on it My current payment with taxes, insurance, and PMI is $1425. rate @ 6.75%
Goal is to remove PMI (been 6 years)
1st option: 6.125% 30yr fixed $1260; $1425-1260= $165 savings per mo.
$5K in closing costs $5000/$165=30 months to cover the closing costs
2nd option:
6.25% 30yr fixed; first 10 yrs is an int only loan.
$1110 for the first 10 yrs
3rd option: 5yr ARM 5.75%, int only for 5 yrs. Payment to be $1039; I would refi in 5 yrs in this case
Savings in 5 yrs between 2nd and 3rd options: ($1110-$1039) x 5 yrs = $4260
I plan to own the home for the next 10 yrs and plan to start renting it out at the end of the year. The broker made a good point about the int only loan in my case: The home is worth $295-310k – said there is enough equity that I don’t need to chip in on lowering the loan amount for safety in case the housing market dropped. Does paying on the principal for 2K to 3K per year seem that necessary in comparison with equity?
I am not sure that I understand your questions but if your goal is to remove PMI then call your lender and tell them to take it off. If your home value is as you say $295,000 and your loan is $167,000 then your LTV is 56% PMI should be taken off after 80% LTV and sometimes they will at 87%. Because the bank will get there 56% back if the house is foreclosed on they no longer need PMI. I would not do an Interest only or an ARM. You are not looking at the risk that goes with both loans. Don’t do an ARM because we are at 40 year lowe with interest rates and all ARM’s do is protect the Bank not you. Interest only is a stay in debt forever loan and when you do sell you still have to pay the full balance of the loan off. If you really want to make the best move refin to a 15 year fixed rate. Today’s rate on a 15 year is 5.62% My calculation of $167k for 15year at 5.62% payment would be $1,369.44 plus taxes and insurance. I don’t know what you are wanting to get in rent but when you do rent it add that to the $1,369.44 payment and I bet your will pay off this house in like 5-8 years. Then when you sell in 10 years you will get $295k-310k cash at closing. The real question is do you want a little cash now (savings with the interest only loan and or arm) or a lot of cash later?
Filed under Home Insurance by on May 20th, 2010. Comment. 
we got a positive decision from the financial ombudsman.?
ok my mum and dad bought a house a few years ago, were sold a life policy by an independent person acting and got a policy from standard life. the person who sold them it filled in part of the form and gave my mum lots of wrong information, my dad died suddenly and the insurance company didnt pay out, now we went to the financial omudsman who has gave us a positive decision saying in his final decision that my mum acted neglegently but not fraudulantely and that the insurance company should pay them the amount of money they should have achieved with the premium that they paid, proportionately, now i know this decision is legally binding and dont want any advice on anything else just wondering if anyone knows what proportionatley means and he also said she has to get 8% interest for every year since the claim was submitted. my dads life policy was 50pounds a month and was for 43000 any information on this would be gratefully received.
It means “in proportion” ..
I assume the judgment failed to state any final figure – in which case you now have another battle on your hands, since the Insurance Company will do their own calculations (“in proportion”) and you will have the task of trying to work out where they got their figures from ..
Since the decision states “mum acted negligently but not fraudulently” it would seem that Dad had some terminal illness (or life threatening condition) that the Insurance Co. was unaware of = and they would never have ‘written’ the Policy in the first place, if they had known ?
If that is the case, then the calculation will be based on the maximum cover that COULD have been obtained for some-one in your Dad’s condition (at that time), for a £50 a month premium .. plainly this may be open to some debate ..
Filed under Home Insurance by on May 17th, 2010. Comment.
I asked this question before about TITLE INSURANCE. Please answer this very specific question.?
If you paid for a title policy on land you purchased 8 years ago and are now putting a house on it, why can they charge you so much money to do a new title policy on just researching 8 years? Why is it so much when all they have to do is go down the courthouse and do a quick computer search for RECENT activity? I know the purpose of title insurance, but to charge the same amount of money for something they already researched seems wrong. By the way, what is the time limit to receive a reduction in a title policy that has already been researched? I can’t imagine having to pay the total price for title insurance on the same land with the same owner, say 2 years after it was done? Mine was 8 years ago. What is the time limit and is their a discount?
Sounds like you are looking for a re-issue rate. Should be available depending on the state you are looking in.
Remember there are 2 components here; A title SEARCH and a title POLICY. The current search should be a current owner and should be much less than a 40-or 60 year purchace; but some states only require a 10 year search for a policy; state specific
Rates for a policy are based on value insured more than time searched. If you only had a policy for land only 8 years ago and now are looking at a single family residence, the rate is going to be higher
Filed under Home Insurance by on May 16th, 2010. Comment.