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To: Fan of Fiat

Supposedly it doesn't build equity as fast, but in the first few years of a loan, equity doesn't build much anyway, even with a fixed rate mortgage.


11 posted on 09/14/2006 6:06:08 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62
That was the point I was going to make when I got an answer...

For an interest only loan at 6.5% vs. a standard ARM at 6.0%, after 12 months, you only have $3,700 less equity.

Since prices are up year over year, if you own the house longer than 12 months, you have enough equity that the difference isn't significant.

Bottom line, increased risk with an I/O loan is negligible.

15 posted on 09/14/2006 6:13:45 AM PDT by Fan of Fiat
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