[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.

[Polybius]

An interest only loan is hardly a ticking time bomb.

That depends upon your financial situation. Today, most buyers that use intrest only loans are buyers that can barely afford the payments during the grace period and have no idea how they will feed the monster after the grace period expires.

Interest-only mortgages were designed for wealthy families who used the loans as cash-flow management tools and could, if necessary, pay off the entire sum by liquidating some stocks and bonds. .........Trouble is, the sheer numbers indicate that the loans are also being taken out by a much bigger sector of the public -- people who are struggling to get into a rising housing market and feel that they couldn't get the properties they want any other way. .......... 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

Is it a ticking time bomb to owe 400,000 on an 800,000 house?

No, but it is a ticking time bomb for those who bought at the top of the bubble and now owe 800,000 on a 700,000 and falling house.

It is a ticking time bomb for buyers who will be forced into foreclosure once the grace period expires.

Mortgage Foreclosures Up 72% Nationally

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.

And think of the money from rental income and mortgage payments that no longer had to be made that went straight into my other investments instead of going to the bank to feed the mortgages.

Think of the fact that, if I stopped working tomorrow, I could maintain my lifestyle for the next 30 years without worrying about foreclosures.