(hat tip to HP reader Mike for the article)
Eleanor Hoxie makes a good living as a marketing manager for a Boston consulting firm, but is she spending her money wisely?
The 28-year-old Rhode Island native says she lives a ''pretty rich life," eating out a lot and planning lavish trips such as her $4,000 vacation to Hong Kong with her boyfriend. But her biggest splurge by far is the $375,000 East Boston loft condominium she bought in August 2004, using two interest-only mortgages to get in the door without a down payment.
''It was a very rash decision," Hoxie said.
''I know I could be doing something better, but I'm unsure where to focus energy. Should I pay down the principal on one of the mortgages, try to get rid of the credit card or student loan debt or focus on retirement savings?" Hoxie said.
Sagan said the purchase of a home with no money down 20 years ago ''was unheard of."
''This product arose in response to those who want to be homeowners but lack the income and/or the assets to make a down payment," he said.
The number of interest-only loans in Massachusetts has surged to 19.5 percent of total mortgages in 2005, up from 1.8 percent in 2000, according to LoanPerformance, a San Francisco firm that tracks mortgage data.
''Without the interest-only option, Eleanor would not have been able to afford the condominium," Sagan said
January 10, 2006
Posted by blogger at 1/10/2006