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Updated over 8 years ago, 07/05/2016
Principal payment only loans - legal?
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