[Polybius]

You are definitely stuck on interest only mortgages.

No, I have never had an interest only loan in my life.

However, almost half of the new buyers need to resort such a foolish loan to afford the housing bubble prices driven up by such loans.

A Growing Tide of Risky Mortgages:.....Here are some scary statistics: In 2004, fully 50.4% of the mortgage loans issued for purchases of single-family homes in Georgia were to pay interest only. That made the Peach State No. 1 in the nation in its share of interest-only mortgages. But a whole bunch of other states were not far behind: California was second, at 47.1% ................ The trouble comes when the interest-only feature expires, which is often after 10 years. If it's a 30-year loan, then the entire principal has to be paid off in the final 20 years. So the monthly payment could abruptly jump by 50% -- even assuming no increase in the interest rate (nearly all interest-only loans have adjustable rates, so the borrower can get whacked if they rise as well). ....... But even some parties that benefit from the rage for interest-only mortgages, like homebuilders, are wondering if the trend may have gone too far. "In most of those cases, buyers have no idea how they're going to pay" the higher payments that will be owed once principal payments begin, says William J. Pulte, founder and chairman of Pulte Homes

Also your tone is a tad angry. Do you have an interest only mortgage?

I'm not angry at all. My mortgages were fixed rate 15 year loans and I paid them off early over a decade ago. As a result, I own two properties, free and clear, in prime locations, one in San Diego, California and one on Puget Sound.

Perhaps it's time for you to get out of California.

I got out of California the very week I finished my medical specialty training but I was able to afford to keep my house as well as buy a second house because I bought my California house with a financially responsible loan and not with a ticking financial time bomb.

My arguments have nothing to do with "California". My arguments deal with buying at a good value without having to resort to extremely risky gimmick loans.

[carolinalivin]

Did we talk about this last week?

An interest only loan is hardly a ticking time bomb. Is it a ticking time bomb to owe 400,000 on an 800,000 house? You are paying the bank the amount you need to borrow the money. The house appreciates over time and you have used the principal you paid off early to do additional investments or whatever.

You talk about how you bought a second home and paid off your house in 15 years. You gave money to the bank you didn't have to give. Think about how many properties you could have had appreciating rather than giving money to the bank so you could feel like you were doing something financially sound.