Interest Only Mortgages

Are you looking for a mortgage that can help you close on your dream home without breaking the bank? Look no further than Interest Only loans! These loans allow you to make monthly payments that only cover interest for a certain period of time, which can make it easier to afford the home you want instead of settling for the home you can afford.

Interest Only loans are available on fixed rate or adjustable rate mortgages as well as option ARMs. And at the end of the interest only period, the loan becomes fully amortized, which means that the monthly payments will increase to include repayment of the principal. But don't let this discourage you, as you can plan to refinance before the interest-only term expires and invest the principal portion of your payment elsewhere while realizing the tax advantages and appreciation that come with homeownership.

As an example, if you borrow $250,000 at 6 percent, using a 30-year fixed-rate mortgage, your monthly payment would be $1,499. On the other hand, if you borrowed $250,000 at 6 percent, using a 30-year mortgage with a 5-year interest only payment plan, your monthly payment initially would be $1,250. This saves you $249 per month or $2,987 a year. However, when you reach year six, your monthly payments will jump to $1,611, or $361 more per month. Hopefully, your income will have jumped accordingly to support the higher payments or you have refinanced your loan by that time.

Interest Only mortgages can be a great option for borrowers with sporadic incomes, as well as those looking to save money in the short-run and invest elsewhere. And with most borrowers repaying their mortgages well before the end of the full 30-year loan term, you can rest assured that you'll be able to make the most of this opportunity. Contact a lender today to learn more about Interest Only loans and take the first step towards owning your dream home!