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From: sgl@psuvm.UUCP
Newsgroups: net.invest
Subject: mortgages
Message-ID: <1659SGL@PSUVM>
Date: Wed, 27-Mar-85 18:05:24 EST
Article-I.D.: PSUVM.1659SGL
Posted: Wed Mar 27 18:05:24 1985
Date-Received: Sun, 31-Mar-85 04:32:05 EST
Lines: 38


My wife and I are in the market for our first home.  I've heard a different
story from virtually every real estate agent that I have talked to about
which mortgage is the best for me.  I thought I would throw it out to you
experienced investors and see which mortgages you've dealt with or are
familiar with and the pros and cons of them.  The three I have been repeatedly
advised to consider are VA, GEM, and VIM.

The disadvantage of the VA or other conventional mortgages as far as I'm
concerned is the way they figure how much you're eligible to borrow.  Since
the payments are at fixed rate the amount you qualify for is based on your
current income.  I suppose this is reasonable, but I prefer to tighten the
belt a bit now and be able to afford a nicer home since I expect my income
to grow significantly in the future.

The disadvantages associated with the Variable Interest Mortgage make me
wonder what the advantages are?  I can't imagine paying a possible 19%
interest a few years down the road!  That's what seems attractive about
the Graduated Equity Mortagage.  The fact that the interest rate remains
constant while the payments increase 7% per year makes the GEM seem ideal
to me even though a $500 house payment grows to around $1200 by the 15th
year.  Can't you *ALWAYS* refinance your home if things don't progress as
rapidly as expected?  Why are some realtors dead set against this mortgage?
Is it simply because they have no experience with it or is there something
that I've overlooked?

I get the impression that there are literally hundreds of different types of
mortgages.  I was hoping that some of you net.investors could share some of
your expertise.  Replies could be sent to me, but it might be more interesting
to post to the net and see what evolves.  If there are sufficient personal
replies I will summarize to the net.
                                                   Many Thanks,

                                                   Steven G. Liptak

                                                   sgl@psuvm.bitnet
                                                        -or-
                                                  liptak@gondor.uucp