Can a mortgage company to try to change interest on the loan for a period of 60 MB, no one to help cust in trouble?

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My mortgage is behind the company and say they want to help me, my loan without interest for 60 months and adding the delay in the payment of principal. It seems to them to help integrate the company filed for bankruptcy. I wonder if the legal process and best keeps me from losing my house.

  1. Reply
    February 17, 2011 at 3:53 am

    of coarse it is legal, it won’t help you much. Try asking for no payments for 6 months many banks are doing this

  2. Reply
    February 17, 2011 at 4:03 am

    Interest only loans are perfectly legal.

    Just make sure you understand all the terms before you sign anything agreeing to the new loan.

    Check on these aspects:
    what is the interest rate and make sure it is a fixed rate forever
    new principle balance after fees are rolled into the new loan structure
    is there a prepayment penalty
    can you revert back to your old loan terms when you want
    Is there PMI or any other fees or hidden expenses
    What happens at the end of the 60 months? is the loan due in full? does it go into a traditional loan?

    It sounds like the company is trying to find a win-win situation that allows you to keep your house and have affordable payments and it allows them to have your loan in good standing where they can actually collect your payments rather than getting nothing and having to process a costly foreclosure. Just make sure you understand all the terms before you sign. If you aren’t sure, take it to a real estate attorney for review and get their input. A $ 300 fee for an attorney is well worth it to save you from financial headache if you get into something you don’t understand.

  3. Reply
    February 17, 2011 at 4:48 am

    It is not a great idea, but legal. If they are willing to stop foreclosure on you with this new plan then it may be all you can do. It gives you 60 months to refinance, which is the good part.

  4. Reply
    Sarah K
    February 17, 2011 at 5:39 am

    Some people find it to be more affordable, but it’s WAY riskier for the consumer… I’d avoid it and put down as much of a down payment as you can afford (as well as rolling PMI into the mortgage itself instead of paying it every month). I’ve seen plenty of people lose their homes to foreclosure who thought that interest-only loans were their shining star of a chance.

  5. Reply
    February 17, 2011 at 6:18 am

    Okay, let’s say you wanted to buy a car for $ 30,000, and could do so with an 8% interest loan, paying only interest.

    That would make your payments about $ 200 per month. Good deal, yes?

    But what will that car be worth in five years? We know that you’ll still owe $ 30,000. Still a good deal?

    How about your credit cards? Is paying interest only a good idea for those?

    So what makes a house any different?

    Well, it will PROBABLY go up in value, but not necessarily. Or maybe the plan to pay just the interest is a temporary plan, and you intend to start paying the principal after a few years of getting the car, credit cards, and school loans paid.

    Maybe it’s a good idea if you plan to pay down other debt that’s at a higher rate, but if the only reason is to get you into a house you really can’t afford, don’t do it.

  6. Reply
    February 17, 2011 at 6:24 am

    The advantage is simply that your required monthly payment is significantly lower than a fully amortized loan. Example: on a $ 100,000 loan at 6%, the 30-yr amortized payment is $ 600, versus an interest only payment of $ 500. I’ve used this type of loan on investment properties – but I wouldn’t use one on my primary residence. The rationale for me is that I’m invested in a property to take the profit out (now or later), so why not take some of it now if I can create a positive cash flow?

    This type of loan is also great for some people who know for sure their income is going to increase significantly in a few years. Unfortunately, there’s been a lot of abuse in promoting the use of interest-only loans, and some unscrupulous mortgage brokers have placed some people into these loans that definitely should not have been.

  7. Reply
    mortgage girl
    February 17, 2011 at 7:05 am

    An interest only mortgage is usually a 30 year fixed mortgage, with interest only for the first 10 years of the loan, then the remaining 20 years payments are prinicpal and interest. A good loan advisor will tell you this is a good product because it allows you to have a lower payment for the first 10 years of the mortgage. The average person lives in their home for only 5-7 years, and even still will most likely refinance within that time, so the interest only gives you a lower payment which is convenient. it is also used to make the payments more affordable, with the intention that once the interest only period is up you will be making more money, or would have refinanced by then. You can always make more payments toward principal if you want, and the interest only payment, is 100% tax deductible. If you have any more questions feel free to email me at
    Good Luck!

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