Interest Only Mortgage Is It For Me

Interest Only Mortgage Is It For Me



Interest Only Mortgage is​ It For Me ?
Interest Only Mortgages is​ a​ risky product and does have its disadvantages.
Interest Only mortgages are tricky,​ because they can be misleading as​ the
payment is​ very small for the​ first 1,​2,​5,​7 or​ even 10 years .​
Note that for the
Interest Only Mortgage you​ will have a​ balloon payment for the​ entire principal
balance at​ the​ end of​ the​ loan term.
Interest only mortgages might be beneficial for people in​ markets where houses
appreciate rapidly and the​ plan is​ to​ remain in​ the​ house for only a​ couple of
years .​
Interest only mortgages are available in​ both fixed rate and adjustable
rate varieties,​ but most interest only mortgages are of​ the​ adjustable rate
variety .​
Since only an​ interest payment is​ due,​ interest only mortgages
usually have a​ lower monthly mortgage payment than mortgages that require
principal and interest payments .​
For example,​ if​ you​ have taken an​ interest
only mortgage loan for 5 years you​ only pay the​ interest on​ your mortgage for 5
years .​
the​ interest only mortgage rate is​ an​ adjustable rate determined by the
current interest rate .​
This preset margin will stay fixed throughout the
remaining term of​ the​ loan while the​ interest only mortgage rate added to​ it
will change (generally on​ an​ annual basis) with the​ fluctuation of​ the​ current
index rate .​
So after the​ interest only mortgage payment period is​ over you
will be paying the​ adjusted interest only mortgage rate and the​ principal,​
which will increase your interest only mortgage payments .​

Interest only mortgages usually have an​ interest only payment option during the
first 1,​ 3,​ 5,​ 7,​ or​ 10 years of​ the​ mortgage .​
Interest only mortgage payment
does not mean negative amortization .​
Interest only mortgage payment loans are
generally not long term solutions .​
Interest only loans for a​ fixed period of
time .​
Interest-only loans are the​ latest tool aimed at​ offsetting high home
prices .​
Interest-only loans represent a​ somewhat higher risk for lenders,​ and
therefore are subject to​ a​ slightly higher interest rate .​
Interest-only loans
are popular ways of​ borrowing money to​ buy an​ asset that is​ unlikely to
depreciate much and which can be sold at​ the​ end of​ the​ loan to​ repay the
capital .​
Interest-only loans helped homeowners afford more home and earn more
appreciation during this time period .​
Interest-only loans may turn out to​ be
bad financial decisions if​ housing prices drop,​ causing those borrowers to
carry a​ mortgage larger than the​ value of​ the​ house,​ which in​ turn will make it
impossible to​ refinance the​ house into a​ fixed-rate mortgage .​

It is​ important to​ keep in​ mind the​ nature of​ interest only mortgages.
Although interest only mortgages play a​ vital part in​ the​ mortgage industry,​
often providing the​ only means for first time buyers to​ hold the​ key to​ their
own front door,​ misusing this type of​ loan is​ counter-productive .​
a​ sample of
the 3 payment options on​ a​ loan amount of​ $250,​000 would be:Minimum Amount Due
$804,​ Interest Only Mortgage $989,​ 30 year payment $1304,​ 15 year payment .​
In
summary,​ an​ Interest Only Mortgage Loan can save you​ thousands of​ dollars and
possibly earn you​ thousands more with the​ right diversified investments over
time .​
An interest only mortgage loan gives people the​ tools necessary to
manage their debts as​ carefully as​ they manage their assets .​
30 year interest
only mortgages typically come with a​ ten year (often referred to​ as​ a​ 30/10
year interest only loan) or​ fifteen year fixed (30/15) interest only period.
Best for people who: Are very focused on​ money management Want to​ reduce
their monthly mortgage payment Do not intend to​ be in​ their homes more than a
few years Interest only mortgages and loans as​ the​ name suggests,​ means you​ pay
interest only for the​ first three,​ five,​ seven,​ ten years of​ the​ loan,​ thereby
lowering your monthly mortgage payment by quite a​ lot.




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