Interest-only mortgages have become increasingly popular in today’s world. They are aggressively promoted by leading lenders and brokers. But are they for everyone? An interest-only mortgage is ideally suited for someone whose income is mostly in commissions and bonuses, or for someone who expects to earn a lot more at a future point of time or someone who is confident that his present investments will make money at a later stage. A mortgage is considered interest-only if the scheduled monthly payment towards mortgage which the borrower is required to make consists of the interest only. The option to pay the interest is for a specified period. It could be for 5 years, 10 years and sometimes even 30 years. If the borrowers prefers, they also have the option of paying more than interest if they want to.
When the borrower pays the interest every month during the specified interest-only period, the payment does not include any repayment of the principal amount. The principal amount or the initial loaned amount remains the same. Interest-only mortgages work best for borrowers who have a valid reason for borrowing money on interest for a lower initial required payment. Importantly, it is for those people who are ready to deal with the consequences.
Generally speaking, interest-only mortgages are not advisable if you are a regular wage earner. This is so because regular wage earners take out moderate-sized home loans and basically don’t have a set strategy for investing the savings.
With interest-only mortgage loans, we have seen that you pay only the interest on the mortgage, on a monthly basis for a specified period. With the result the principal remains as it is and at the end of the specified period of time, you either refinance or pay the balance in lump sum, or start paying off the principal. In all these cases your payments go through the roof and this is the reason financial advisors don’t recommend interest-only mortgages to regular wage earners.
You can get detailed information about every aspect of an interest-only mortgage loan either through online resources or from your financial advisor. You can also go through any of your friends who have availed these loans in the past.
Related Articles of Interest :
-
Atlanta Interest Only Mortgages
10 August 2010 8:30 PM |
No Comments
Nearly half of the home mortgages in Atlanta are interest-only mortgages. Owing to the price appreciations of homes being much higher than the appreciations in wages in Atlanta and worldwide, people generally search for options to compensate. In such a situation, Atlanta banks came forward...
-
Florida Interest Only Mortgages
10 August 2010 8:30 PM |
No Comments
An interest-only mortgage is one in which you only pay back interest with no principal for a certain period of time. After this time period, which is usually five to ten years, the payment increases to include repayment of both interest and principal. Most lenders...
-
New Jersey Interest Only Mortgages
10 August 2010 8:30 PM |
No Comments
New Jersey real estate market has picked up lately due to various reasons. Mortgage rates are applied to the principal mortgage amount at which, a loan is provided to the borrowers at a fixed or adjustable rate. These rates are decided by the mortgage company...
-
Dallas Interest-Only Mortgages
10 August 2010 8:30 PM |
No Comments
You are buying the home of your dreams with an “interest-only mortgage!” You’ll get a low mortgage payment, and you’ll maximize your tax deduction, all on your current income! Everything seems to be going good. But have you actually understood the notion of interest-only mortgage...
-
5 Year Interest Only Mortgages
10 August 2010 8:30 PM |
No Comments
Interest-Only Mortgages, have been popular for decades now due to the primary reason that they allow you to pay only interest for the first five, ten or thirty years of the loan, thereby lowering your monthly payment. Since the interest is paid on a monthly...
-
Current Mortgage Interest Rates
10 August 2010 8:30 PM |
No Comments
A mortgage is a loan that is paid back over a set period of time. Taking a mortgage therefore involves paying a certain amount as interest in addition to the principal borrowed. Mortgages can be broadly classified into two types based on the interest rates....
-
Interest Only Mortgage Rates
10 August 2010 8:30 PM |
No Comments
Mortgage rates are applied to the principal amount. These rates are decided upon by the mortgage company and depend on many factors like the location of the house, type of house, number of people living in it and its geographical setting. Some borrowers may find...
-
Interest-Only Mobile Home Loans
10 August 2010 8:30 PM |
No Comments
Mobile homes have become popular with many homeowners efficacy as well as cost efficiency. There are many loans available in the market presently for financing the buyer’s varying and specific requirements. An interest-only mortgage or loan is one that allows borrowers to pay only the...
-
10 Year Interest Only Mortgages
10 August 2010 8:30 PM |
No Comments
So, finally you have purchased that dream house of yours. Your dream of rubbing shoulders with what you consider your peer group is finally a reality. And how did you buy that house? Well, you have gone in like a brave soul and got yourself...
-
Interest Only Mortgage Loans
10 August 2010 8:30 PM |
No Comments
One of the great things about interest-only mortgages lies in the fact that you they are not interest-only. You also need to repay the principal! Interest-only mortgage loans have been in existence for a long time, contrary to what some people think. They are loans...