Mortgage Options

**heatherly30** · 07-13-2007, 10:30 AM

I am new here and hoping for some advice. Could anyone tell me the pros and cons of:

Interest Only Mortgages
and
Taking out a second Mortgage

Explain in real simple english (elementary).

We really need to come up with a way to have a little extra money each month, or to save on credit card payments (which we have a lot of).

I dunno...I'm clueless and wondering if we have any options.

**Jenna** · 07-13-2007, 11:39 AM

http://www.fool.com/homecenter/homec...?source=PFinAg

**chatterweb** · 07-13-2007, 10:09 PM

Originally Posted by heatherly30

I am new here and hoping for some advice. Could anyone tell me the pros and cons of:

Interest Only Mortgages
and
Taking out a second Mortgage

Explain in real simple english (elementary).

We really need to come up with a way to have a little extra money each month, or to save on credit card payments (which we have a lot of).

I dunno...I'm clueless and wondering if we have any options.

How much debt do you have??

I have an Interest Only Mortgage. We got it because we were not sure we wanted to live in this home forever.

It originated in 2004, and is 7 year libor rate interest only. No prepayment penalty.
The loan amount was $299000.00.
The monthly payment is $1112.63.
The original monthly payments were $1124.63, but when you make additional payments to principal on an IO product, the monthly payment goes down over time.

In 2011, the loan will "reset" to a higher interest rate.

A second mortgage is more commonly know as a HEL or HELOC.
A HEL is a fixed rate loan that you pay back over a period of years. The monthly payment is fixed.

A HELOC is like a credit card. Some have a fixed intro, or a low teaser rate, usually for 3 to 6 months then the rate goes to prime.

Do you have decent credit scores???

Can you get some 0% credit card offers to balance transfer the other debt to?

I had close to $9000.00 in credit card debt and those 0% interest offers helped out alot.

You could get a HELOC or a HEL, however, if you are going to run up the credit card debt in the future I would not advise to get one.
Budget, cut spending etc...

HTH!!