Hey, I have read alot about Neg Am loans and alot of stuff out there suggests that it isnt that good of an idea. I just wanted to know what experienced mortgage people thought about Neg am loans and is it even worth getting into when buying your first home. Thanks

When buying your first home, the simple answer is an overwhelming NOOOOOO!!!!

NegAm loans are only useful or beneficial for a very small percentage of people, mostly investors. Even then the creative use of a HELOC will work better.

I agree with OrlandoLO whith NO to NegAM for a first time home buyer.

If the minimum payment feature is needed for a buyer to feel comfortable than it is not the correct loan.

NEG-AM is great for investors that want to use their cash-flow to go towards something else while owning the home for a short period of time. I have been a Loan Officer for 6 years, and have never had a customer that needed this loan and I have not had to sell it to keep food on my table.

Well, whats the opinion on interest only? basically looking at a $300,000 home with 5% down, BUT am hoping to keep total monthly payments down! Isnt it true with a NegAM Loan you have the choice to not only pay the Neg part, but an interest only payment as well?

I responded to your other post.

A NegAm loan (or a Pay Option ARM) usually offers 4 payment options: The lowest is the one that causes deferred interest, meaning your total loan balance is higher after you make the payment. The next payment is the Interest Only option, meaning you pay only the interest due on your loan and the balance remains the same. The other two options are 30 year amortized and 15 year amortized, meaning the loan will be paid in full if you make the same payment for 30 or 15 years.

What I suggest is a 40 year loan with the first 10 years being interest only. Fannie Mae offers this loan with her MyCommunity program. Yes its expensive in the long run, but by then your child will be older and you will be earning a higher income with you and your wife both working. Also, this is a conventional, conforming loan and has no pre-payment penalty. Can you afford the payment? That depends on the cost of your insurance and taxes and of course your ability to sell real estate.

simple answer. Just stay away form negative amortization loans. There not good and very hard to benefit from. Unless you know 100% what it means and have a set plan on how to benefit from it i say stay away from them.