Interest Only Loans

An Interest Only loan does not pay down any principal on a balance unless extra money is added to the monthly payment.

Most interest only loans have a specific term that is allowable to make only the interest payment.  At the end of the term the loan will become fully amortized that includes the balance and number of remaining years of the loan to include the principle and interest.  In most cases the payment will be much higher.

Since you will not be building any equity in your property by just paying the interest only payment, it is recommended if possible to add additional money to your payment each month. 

With an interest only loan most people opt to refinance their loan on or before the loan payment adjusts.

An interest only loan can help individuals who are looking for a lower payment on their mortgage with the anticipation of increasing their income before their interest payment increases.  Also individuals who have an income that is commission based can always make the interest only payment if they need too, and also pay more on the payment when their income is higher.

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Deborah McNaughton

Your Mortgage Advisor for Life

President of Legacy Financial Services
Author - Radio Host - Columnist
Nationally recognized "mortgage and financial" expert
Seen on CNN, Bloomberg, Good Day NY and others

Host of the Money Manager show on KKLA 99.5FM

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