On Tue, 18 Jan 2005, Jordan Hayes wrote:
>> I love this phrase I just read in a letter to Business Week:
>> "negative amortization variable-interest mortages with low teaser
>> rates." I'm guessing that this means that in the early stages, your
>> monthly payment doesn't even cover the interest, so the difference
>> gets tacked on to the principal - and, should market interest rates
>> rise, so will your mortgage payment. What are people thinking when
>> they sign up for these things?
>
> I had one in the early 90s for a while. It was just the ticket.
>
> You don't see the benefit? I think it's clear.
>
> In particular, it's a no-brainer when appreciation in the market is
> higher than interest rates. Ever take any math classes? :-)
>
> /jordan
It's not just math: you're gambling on what is going to happen in the next few years (at least) in complex financial markets. Call me a conservative fogey, but I'm not interested in potentially gambling away shelter for my family.
Miles