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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Tommaso who wrote (44863)	11/6/2005 12:07:17 PM
From: mishedlo	Read Replies (2) of 110194

Am I to understand that you own your house with an adjustable rate mortgage? Yes - an interest only Libor product And I believe we have good reasons too. This biggest part of that reason was concern over jobs. Our mandatory payment was something like $1500 on a fixed 15 year loan. Our payment on the interest only loan was $500 or so initially. It is now about $800. But we send in close to $2000 every month. There was a time both mine and my wife's source of income could be lost. We did not want to be forced out of our house in any kind of "panic sale" if that happened. That interest only provision was and is a nice cushion IF we need it. Please bear in mind we have about 75% equity in the house and enough in cash to pay about half of that balance off too. That is emergency money so to speak. As interest rates rise that cash is earning higher interest. Thus our leverage or risk or whatever you want to call it is quite low. Mish

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