Re: sell and "paper out" Michael

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Posted by Michael Morrongiello on May 03, 2008 at 20:12:38:

In Reply to: Re: sell and posted by Abel on May 03, 2008 at 15:16:42:

Abel:
A loan which amortizes pays principal and interest back each month and eventually through principal reduction amortizes down to a zero balance.

An Interest only loan is a loan where ONLY the interest is being paid each month and no amortization of the principal is taking place.

As many lenders, Wall Street, and private lenders are finding out, eventually that principal must be repaid.

Often times borrowers, especially in tight credit markets can no longer refinance or access the funds needed to take out the balloon payment when it matures.

So, amortizing debt at this point in time is being looked upon more favorably than non amortizing or interest only debt.

Hope this helps...

Warmly,
Michael Morrongiello

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