Interest Only Loans

Interest only loans may be just what you need to pull yourself out of a financial slump. An interest only loan will leverage your income so that you can afford to pay off debts and get your credit back in order quickly. Interest only home loans can put you in a house bigger than you originally thought you could afford by offering you low interest only payments for the first part of your loan.

Interest only loans are relatively simple. With this type of loan, you will make payments that only go toward the interest. None of your interest only loan payments will pay off the principal in the loan. This means that when the interest only loan payments change to pay off the principal as well as the interest, you will still owe the full amount of the loan.

An interest only loan versus a conventional loan may be a good idea for you provided two things happen. The first thing you must depend upon to make this type of loan work for you is the fact that you will be making more money by the time the interest only payments are done and the more expensive interest plus principal payments come due. If you take out a $500,000 loan for a house, your interest only payments will be $2500. Your interest plus principal payments, however, will be $3221. That’s a $721 jump in one month’s time.

The second factor you depend upon is the market value of the house rising by the time the interest only loan payments are done. If you choose to refinance at this time, the higher market value for your home will mean that you have equity in your home even though you have paid nothing toward the principal in order to build equity yourself. As long as there is equity in your home, you can refinance and get a mortgage that is smaller than the one you started with.

There are so many benefits to interest only loans! Speak with one of our mortgage officers today and find out if interest only loans are the type of loan for you.

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