What Is An Interest Only Mortgage Is It Right For Me

What Is An Interest Only Mortgage Is It Right For Me

What is​ An Interest-Only Mortgage? is​ It Right For Me?
Consumers are generally categorized into three classes:
1 .​
Those who shudder at​ the​ very thought of​ paying interest.
2 .​
Those who are willing to​ pay interest in​ order to​ have more purchasing power based on​ their current income level.
3 .​
Those who view interest as​ a​ cost of​ doing business and use it​ to​ their advantage .​
Yes,​ paying interest does bring some financial advantage!
There are many common misperceptions about interest only loans .​
The first one many people have is: All I​ will ever do is​ pay interest and I​ will never be able to​ pay off the​ principal of​ my home .​
An interest-only loan can best be described as​ a​ mortgage (loan) that allows the​ mortgagor (borrower) to​ pay only the​ interest of​ the​ loan for a​ specified period of​ time typically during the​ first 2 to​ 10 years of​ the​ loan.
While the​ first classification of​ our consumers are frantically reaching for a​ brown paper bag,​ in​ which they can breath heavily in​ and out-of,​ the​ other two may also be wondering why anybody would want to​ pay interest-only for up to​ one-third of​ the​ loan’s lifetime .​
The reasons are as​ follows:
1 .​
Paying the​ interest only during the​ early parts of​ the​ loan excludes the​ amount of​ the​ monthly payment that would have been applied toward the​ principal of​ the​ loan thus lowering the​ payment .​
In a​ market with high housing costs this makes getting into a​ home more affordable.
2 .​
Leverage .​
Why pay down a​ mortgage at​ 6% when a​ portion of​ that payment could be invested somewhere else with a​ higher return?
3 .​
Snowballing .​
Suppose a​ borrower could free up some of​ his mortgage at​ 6% to​ be applied toward his or​ her credit card that has an​ interest rate of​ 18 – 24% .​
Once he/she had that card paid off with money saved by not paying toward the​ principal,​ he/she could then apply the​ saved principal plus the​ recently paid off credit card payment toward the​ other high interest debts – we know you​ have them – viola snowballing.
To take advantage of​ an​ interest only loan,​ check out our recommended lenders .​
After careful research,​ our gurus recommend these lenders:

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