Interest Only Mortgage Should I Get One

Interest Only Mortgage Should I Get One



Interest Only Mortgage Should I​ Get One ?
Interest Only Mortgages is​ a​ risky product and does have its disadvantages it​ a​ tricky form of​ mortgage because it​ can be misleading as​ the​ payment is​ very small for the​ first 1,​2,​5,​7 or​ even 10 years .​
The Interest Only Mortgage 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 on​ your loan it​ does mean however that the​ Interest only mortgage payment are only for a​ short term .​
Interest-only loans are the​ latest tool aimed at​ offsetting high home prices and it​ does represent a​ somewhat higher risk for lenders,​ and therefore are subject to​ a​ slightly higher interest rate .​
It is​ however a​ 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 .​
It 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​ 30/10year 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 and 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 .​
But it​ is​ important to​ also look at​ the​ other side of​ the​ interest only mortgage if​ the​ base interest start to​ rise your payments can start to​ rise with it .​
So have a​ close look at​ the​ relationship between the​ interest rate and your mortgage payment today before you​ jump into an​ interest only loan.




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