Every so often, I get questions from readers. I’d love to get more (contact me) but sometimes the questions I do get deal with topics that are a little outside my level of expertise. When this happens, I often try to direct the person to place that I think can help them find an answer. It may be a specific blogger that I know writes about the topic fairly often. However, it might be some very helpful forums. I’ve been spending some time on Wesabe Groups and find that there’s a nice community there. While I haven’t spent much time there, I’ve also read a lot about the Get Rich Slowly Forums. These are two places where you can ask questions and get a variety of answers – surely some good and others bad. As always, you’ll have to be your own judge on the best path to choose.
The question that spurred this comes from “Jonathan Papelbon” (a name I’ve picked to protect the original writer’s identity):
I bought a house a year ago, and now Zillow shows that it has lost 12% in value!!! I am paying an interest-only loan for 7 years (6 years left), and I don’t know what to do. Should I start putting money toward the principal so that when I want to sell, I will be able to break even? Or should I continue to put $$ toward other debt and savings? This is not just a decision for me, my wife does not want to be stuck here for too many more years, in case we need to move into a bigger place if we start a family.
I made an attempt to answer the question, but mostly I cautioned him about the dangers of interest-only loans and using Zillow as a guide (though it works well for many properties). The other thing that I wanted to note is that extra money saved in a bank account might be better off than put towards paying off the loan. Why? Well if you use up this buffer and then run into a few bad months, lenders will have no sympathy for you. However, if you can make the regular payments and keep that buffer money for a future rainy day, the lender won’t know it’s raining for you.
This is kind of an open question and I’m sure if we had full information someone could really give great advice. However, perhaps you’ve found something here that I missed. I’ll be the first to admit that I don’t follow interest only loans because I’ve always avoided them. If you have some good ideas please let them in the comments.