Quote:
Originally Posted by irishgrl
. . . (I just think adjustable mortgage rates with balloon payments or anything that follows prime is a bad BAD thing.) . . . .
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It really just depends. Homes across America have tripled and quadrupled or more in price over the last ten or so years and some major markets show no signs of significant slowing down. So, if you bought a house like I did and can sell it eight years later for four time or more than what you paid for it, the 100% financing or balloon pmt financing made you several hundred thousand dollars of post tax money (which you could multiply by about 1.3%) to compare it to pretax dollars (again, the law allows a $250,000 tax exemption in gain per owner occupant every two years) -- The trick now is to buy in an up and coming area and pay below market. Yes, it is still a gamble, but it is a slightly less risky one because as long as you can make the payment, you have a place to live as opposed to losing your cash in the market. And, you can always keep refinancing every three years (most ARMS come in then) until the market gets better and if you cannot afford the .05% (usual) increase in the interest rate. the cost of the gain in the sale in five or so years after that usually will more than compensate for the cost of refinancing, which is deductible.
Real estate is a very wise investment if you know what you are doing.