Wells Fargo says survey finds most pay principal on interest-only mortgages
From today’s San Francisco Business Times, “Wells Fargo said Monday that a survey it commissioned found many Americans are paying against principal on their interest-only mortgages despite rising gas prices and sharp declines in consumer confidence.”
What that means is that just because people have the OPTION of paying as little as possible on their mortgages, they’re actually paying down their principal balances VOLUNTARILY. What a concept!
“The Wells Fargo Second Annual Survey of American Homeowners found that of the 8 percent of homeowners with interest-only real estate-secured accounts, 73 percent majority pay both the principal and interest at least some of the time. Of that 73 percent, 23 percent pay the principal in addition to interest all of the time while an additional 8 percent make principal payments as well as interest payments outside of the standard payment schedule. But one-fourth pay only the interest. These behaviors were consistent across both age and income.”
“Respondents were asked about their reasons for choosing an account with an interest-only payment feature and the primary responses were to direct their funds into more profitable investments and to lower their monthly payments. Choosing this type of loan to be able to buy a more expensive home was not the most popular reason cited, according to Wells Fargo.”
