Interest Only Mortgages
by
Gregory Grant
Home ownership rose to a record 67.7 percent in the third quarter of this year. More people than ever were able to get a mortgage of one type or another. One type, an interest only mortgage, is completely tax deductible for the first 10 years, since that's when all the interest is paid.
Advantages
"The major advantages for an interest only mortgage are that one you're able to write off your complete monthly payment," says James Cotto of Merrill Lynch. "Secondly your payment has the possibility of being lower. Third, and most importantly, if you pre-pay principle at any given moment not only do you lower your monthly payment but you shorten the period of the mortgage period. Unlike a fixed mortgage where the payment remains the same and you just shorten the period."
The low monthly payment can free up money for investments in the stock market or things like home improvements. But anyone with an interest only mortgage needs to keep a close eye on the calendar.
"The one hidden risk that a potential suitor for an interest only mortgage must realize is that for the first ten years it is interest only and if you live in the house past ten years and you keep this mortgage upon the 11th year it turns into a fifteen year amortized mortgage," says Cotto.
While there may be better investments than a home, you have to live somewhere. However you do it, with an interest only mortgage or otherwise, getting into the housing market is a good way to own your own home and to create a healthy tax deduction at the same time.
In recent years, companies have flocked to the web to set up dot.com sites. Initially retail companies caught the attention of investors and consumers alike.
When to sell a stock is as important as when to buy a stock. The investor that goes beyond just looking at the financial pages will find that this kind of in-depth research will pay off in helping to make wiser investment choices.