Posted by Mike A (NY) on January 09, 2003 at 16:12:44:
I recently used a mortgage broker to re-finance my primary residence. During the process I mentioned that I owned some investment property and asked what he could do for me in regards to re-financing. Earlier this week he called and mentioned that he could get me into an Entrepreneur loan, that sounded too good to be true.
The way they work, as best I can tell, is you are offered four different payment options each month. A) a set fee, usually less than interest due, B) interest only, C)interest plus principal and D) Interest, principal and a pre payment of principal. The rate offered was 5.03%, which really perked my interest(no pun intended). There are some points involved, but it sounded like a good plan, especially if there were months when you needed extra cash flow.
Has anyone heard of this type of loan and if so are there perhaps some strings that I may have missed. He is sending me the paper work to look over, but I was hoping some of the loan experts here may have some info on this.
These are very good loans that offer you a lot of flexibility if your property is not lease out. You can pay the neg. amortization ammount, which may keep your cash flow steady. Also the 20 year history of the interest rates on these loans are around 6.875%. The important item to look at, is your margin. If you can keep the margin below 2.5 you have a good deal. (mta or cofi indexes)
Posted by Nate(DC) on January 09, 2003 at 22:42:59:
That’s a creative name for it, but basically it’s an Option ARM which is available from Washington Mutual, World Savings, Chevy Chase…a variety of sources.
There are no “strings” other than the fact that the loan can negatively amortize. If you are aware of that, and okay with it, then no, nothing weird.