Is An Interest Only Mortgage For You

Is An Interest Only Mortgage For You



Is An Interest-Only Mortgage For You?
Many people get confused when it​ comes to​ interest only mortgages .​
It’s no wonder .​
There is​ actually no such thing as​ a​ mortgage which you​ only pay the​ interest on​ .​
With an​ interest only mortgage,​ you​ still have to​ pay down the​ principal on​ the​ loan .​
What you​ actually get is​ an​ interest only payment method which lasts for a​ set period and then you​ revert to​ a​ more traditional type of​ mortgage.
As you​ probably know,​ your mortgage payment mostly goes to​ pay off the​ interest; typically 95% of​ your payment goes toward the​ loan interest .​
So for a​ standard $100,​000 mortgage at​ 6% interest,​ your monthly payment would be $600 .​
Of that $600,​ $100 goes to​ pay down your principal and $500 goes to​ pay the​ interest charges.
Interest only mortgages involve jumbo loans and the​ difference in​ the​ monthly loan payment gets larger as​ the​ loan amount increases .​
So while there is​ a​ difference of​ $100 for a​ $100,​000 loan,​ the​ difference on​ a​ $1,​000,​000 loan would be $1000 .​
Savvy investors can use that $1000 per month to​ leverage their income and build assets much faster.
Interest only mortgages have traditionally been used by investors or​ wealthy individuals who are able to​ make a​ profit on​ the​ principal part of​ their mortgage payment .​
However,​ today virtually anyone can obtain an​ interest only mortgage.
The payment period of​ the​ interest only mortgage is​ based upon the​ adjustable rate mortgage .​
However,​ sometimes,​ it​ can be offered with a​ fixed rate as​ well .​
However,​ the​ payment period usually does not run for the​ entire loan term,​ even with a​ fixed rate mortgage .​
Interest only mortgages are only temporary; InterstFirst loans only allow interest only mortgage payments to​ be made for half of​ the​ total loan term .​
When the​ interest only mortgage payments come to​ an​ end,​ the​ amount of​ your loan payment will then rise to​ include both the​ interest and principal.
Interest only mortgages have advantages for certain types of​ borrowers .​
For one thing,​ the​ payments at​ the​ onset are lower so this frees up additional cash to​ be used elsewhere It can be invested or​ it​ can be used for needed cash flow .​
The spare cash can be used in​ any manner such as​ additional income,​ college expenses,​ or​ to​ build savings .​
The catch is​ that after a​ certain time,​ your interest only payments will expire and then your loan payment will be higher each month thereafter.
You are the​ only one who knows your situation and can determine if​ an​ interest rate mortgage is​ right for you​ .​
Consult with a​ banker or​ mortgage broker for advice and specific financial information such as​ projected monthly payments,​ then weigh your other mortgage options before you​ decide.




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