An interest only loans loan allows you to pay just the interest on the mortgage for a set period, often the first 5, 10 or 15 years. You don't have to pay principal during that time.
As mortgage rates rise and home prices zoom upward, some home buyers are turning to interest only mortgage loans to secure the home of there dreams.
Most borrowers expect to sell the house or refinance the loan before the interest-only period ends. The main attraction of an interest-only mortgage loans are the lower monthly payments and the ability for borrowers to control there cash flow.
To view your interest only payments please go to our interest only mortgage calculato.
We also have an interest only mortgage vs. fixed rate mortgage calculator.
Who Does An Interest Only Loan Appeal To?
Interest only mortgage loans are really for borrowers looking to either leverage their cash or borrowers who want the lowest payments they can get.
For that second group, interest-only mortgages are the home equivalent to auto leasing. Both are handy ways to get something that you otherwise couldn't afford.
Astute investors also use interest-only mortgage loans to free the cash that otherwise would go toward principal, and invest that cash where it presumably can bring a better return on investment.
They have the option of paying more than the minimum amount every month and applying that money toward principal. If they don't pay extra, they don't contribute toward their home's equity. They still build equity, though, if the value increases and they eventually sell the home for more than they paid for it.
If you are interested in an interest only mortgage loan, it is best to go through a mortgage broker, who can search for the appropriate loan offering among various mortgage lenders.
Interest-only mortgages are a financial tool, but like all tools, they work best when they are used for their intended purpose. That means they should be part of a well-thought-out long term financial plan.
If you would like to receive a free rate quote on an interest only mortgage loan contact us now.
