Do you think the banks should bring back interest only loans?

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Winston Heverly, GRI, ABR, SFR, CDPE, CIAS, PA (Coldwell Banker Access Realty)

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Rainmaker
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The Woodland Team of Texas

The Woodland Companies - Austin, TX

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Whatever works for them.

Jan 19, 2019 05:04 PM

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Bob Crane

Stevens Point, WI

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Bob Crane

Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI

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That is for others to decide.

Jul 29, 2018 08:07 PM

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Bob Crane

Stevens Point, WI

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John Meussner

Mortgages in AZ, CA, CO, DE, FL, GA, IN, MD, MN, MT, NC, NJ, NV, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI - Fair Oaks, CA

#MortgageMadeEasy Fair Oaks, CA 484-680-4852

We still have interest-only options, Winston. They're not as common as in the past, but we've still got em.

I think high LTV I/O loans are tricky, because even a slight market reversal can put people underwater and cause a major ripple effect (like we saw during the meltdown), but with some equity built into the home as a buffer, I/O loans are really great (and safe) options for a lot of folks.

Sep 10, 2015 05:28 AM

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Michael Jacobs

Pasadena, CA

Rainmaker
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Sybil Campbell

Fernandina Beach, FL

Referral Agent Amelia Island Florida

Maybe in very rare cases, but there should be a whole lot of disclosure to prevent problems.

Sep 10, 2015 02:59 AM

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Michael Jacobs

Pasadena, CA

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Mike Sasse

OfferPad Home Loans, LLC - Scottsdale, AZ

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Honestly, it depends on the market that you are in. Here in Hawaii, I see them coming back. However, the product isn't being used to get low income buyers into elite income properties. The guidelines to qualify for the loan are sometimes more stringent than a 30-yr. It is really about the client's short and long term plans with the property and what the market is doing. Is it worth it to take an I/O loan for a few years in Honolulu to build $100K equity with the housing prices escalating? Absolutely? Somebody in Michigan doing the same? Doubt it.

Sep 11, 2015 09:23 PM

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Rainmaker
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Michael Jacobs

Pasadena, CA

Pasadena And Southern California 818.516.4393

I believe there is still that option with some lenders. Borrower knowledge of the product and the ability to repay as agreed is still paramount.

Sep 11, 2015 01:04 AM

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Rainmaker
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FN LN

Toronto, ON

Many banks offer interest only loans and lines of credit.

Sep 10, 2015 08:27 PM

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Rainmaker
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Winston Heverly

Coldwell Banker Access Realty - South Macon, GA

GRI, ABR, SFR, CDPE, CIAS, PA

The average one stays in their home is 5-7 years. What do they really pay down on a balance? My opinion is the default rate is higher for those only putting down 3.5 -5% like FHA loans.

Sep 10, 2015 12:05 PM

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Rainmaker
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Captain Wayne - Rowlett Real Estate School

Rowlett Real Estate School - Panama City, FL

Rowlett Real Estate School / Owner and Instructor

It sounds good to me Winston.

Sep 10, 2015 11:51 AM

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Rainmaker
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Jeff Pearl

RE/MAX Distinctive / LIC in VA - Lovettsville, VA

Full Service Full Time Realtor

Yes, as long as the buyer has acceptable credit, 6 months mortgage payments in reserve, employment is verified, and can put at least 10% down. But not sure why anyone would want interest only these days?

Sep 10, 2015 08:08 AM

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Rainmaker
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Les & Sarah Oswald

Realty One Group - Eastvale, CA

Broker, Realtor and Investor

Nope, unless the buyer is capable of putting 20% down.

Sep 10, 2015 07:53 AM

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Rainmaker
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William Feela

WHISPERING PINES REALTY - North Branch, MN

Realtor, Whispering Pines Realty 651-674-5999 No.

NO!!!

Sep 10, 2015 05:52 AM

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Rainmaker
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Joan Cox

House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO

Denver Real Estate - Selling One Home at a Time

I have a seller right now that still has their interest only loan, and has to now sell because the payments will hike so high they cannot afford them. Think not. Maybe then homeowners won't be tempted.

Sep 10, 2015 05:47 AM

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Rainmaker
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Annette Lawrence , Palm Harbor, FL 727-420-4041

ReMax Realtec Group - Palm Harbor, FL

Making FLORIDA Real Estate EZ

Yes I do.

However the bank must be required to keep that loan in their portfolio.

Sep 10, 2015 05:39 AM

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Rainmaker
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Kathleen Luiten

Resort and Second-Home Specialist - Princeville, HI

Kauai Luxury Ocean Home Sales

No.

Sep 10, 2015 04:59 AM

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Rainmaker
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Raymond E. Camp

Ontario, NY

Only if the clients are paying cash!

Sep 10, 2015 03:33 AM

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Lise Howe

Keller Williams Capital Properties - Washington, DC

Assoc. Broker in DC, MD, VA and attorney in DC

Yes but on a very limited basis

Sep 10, 2015 02:57 AM

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Rainmaker
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Stefan Winter

Real Estate in IL & NV | Owner of Real Estate Web Tech | Daily Vlogger - Las Vegas, NV

Owner - Winter Group & Real Estate Web Tech

No, I don't think it is a wise choice.

Sep 10, 2015 02:12 AM

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Rainmaker
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Sam Shueh

(408) 425-1601 - San Jose, CA

mba, cdpe, reopro, pe

I think those not qualified should wait til he have saved enough.

Sep 10, 2015 12:59 AM

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Rainmaker
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Roy Kelley

Retired - Gaithersburg, MD

The mortgage interest rates are so low that there is little need for interest only loans.

Sep 10, 2015 12:52 AM

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We still have interest-only options, Winston. They're not as common as in the past, but we've still got em.

I think high LTV I/O loans are tricky, because even a slight market reversal can put people underwater and cause a major ripple effect (like we saw during the meltdown), but with some equity built into the home as a buffer, I/O loans are really great (and safe) options for a lot of folks.
Maybe in very rare cases, but there should be a whole lot of disclosure to prevent problems.
Honestly, it depends on the market that you are in. Here in Hawaii, I see them coming back. However, the product isn't being used to get low income buyers into elite income properties. The guidelines to qualify for the loan are sometimes more stringent than a 30-yr. It is really about the client's short and long term plans with the property and what the market is doing. Is it worth it to take an I/O loan for a few years in Honolulu to build $100K equity with the housing prices escalating? Absolutely? Somebody in Michigan doing the same? Doubt it.
I believe there is still that option with some lenders. Borrower knowledge of the product and the ability to repay as agreed is still paramount.
The average one stays in their home is 5-7 years. What do they really pay down on a balance? My opinion is the default rate is higher for those only putting down 3.5 -5% like FHA loans.
Yes, as long as the buyer has acceptable credit, 6 months mortgage payments in reserve, employment is verified, and can put at least 10% down. But not sure why anyone would want interest only these days?
I have a seller right now that still has their interest only loan, and has to now sell because the payments will hike so high they cannot afford them. Think not. Maybe then homeowners won't be tempted.
Yes I do.

However the bank must be required to keep that loan in their portfolio.
I think those not qualified should wait til he have saved enough.
The mortgage interest rates are so low that there is little need for interest only loans.