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Updated over 8 years ago, 07/05/2016

User Stats

27
Posts
3
Votes
Ryan DeLange
  • Investor
  • Green Valley, AZ
3
Votes |
27
Posts

Principal payment only loans - legal?

Ryan DeLange
  • Investor
  • Green Valley, AZ
Posted

Hi, I've heard some gurus, Matt Terio to be specific, talk about a three option letter of intent.  The final option is a principal only loan, where you divide up the payments over 20 years and simply pay off the house that way - with no interest.  

A simple example, would be - lets say I agreed to buy a house for 30,000 dollars with a 20% down payment and a 20 year principal only loan for the rest (24,000).  I would divide the 24,000 into monthly payments (24,000/20 years/12 months = $100 per month.  You could do a balloon payment after a specified time. 

Somebody told me that this type of loan is illegal.  Can someone help put me straight, because I'd love to make an offer like this. 

Thanks

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