Interest Only Loans-Are They Right for You?
For many people an interest only loan can provide much peace of mind and numerous advantages. The biggest advantage of this type of loan is that it gives you control of your payment as well as your cash flow. In the event that you run into unexpected financial difficulty or extra expenses you can lower your monthly payment by paying only the interest.
- Interest only loans are available with numerous terms-including fixed rate and adjustable
- Gain the ability to qualify for a higher priced home
- You can invest the principle you would be paying on the mortgage in something else, such as savings, stocks or even a business
- You still have the ability to make the principal payment at any time
- Lower monthly payments
- When you pay interest only the principle is not being reduced
- May be subject to higher interest rates
- The principle on the loan balance will not decrease during the interest only phase of the loan term
- Payments will be higher for the remaining portion of the loan term than the interest only portion
With an interest only loan, only the interest is paid in the first portion of the loan. Based on your lender, the interest only term of the loan can be flexible. The most common period is the first five or ten years of the loan.
If you decide an interest only loan is the right option for you, MortgageLenders.org can help you locate a variety of lenders to compare interest only loan products.