An Interest-only mortgage is a type of loan in which the mortgagor (the borrower) is required to pay only interest, with the principal repaid in the future. If you have a short-term ownership outlook, seeking lower monthly payments and have good credit and ample assets – an Interest Only Loan may be right for you!
Interest Only Loan Highlights
- Allows the borrower to pay just the interest for a designated time period, however at some point the borrower must pay a portion or the entire loan principal.
- Payments may rise and fall based upon the rate in which the loan it tied to (if the rate is adjustable).
- Interest only mortgages reduce the monthly rate the borrows pays on the front-end of the loan, because the principal is excluded from the payment during the initial period.
- Once the introductory interest only period ends, the loan may require a full balance payoff or conversion to a conventional loan that may have a higher interest rate.
- An interest only payment can be a loan feature within an adjustable rate mortgage (“ARM”) or balloon mortgage.
- An interest only loan may save the borrower money in the short term, but they actually cost more over a 30-year term.
How Interest Only Home Loans Work
- Borrowers pay just the interest (no principal) for a designated time period and eventually the borrower is required pay a portion or the entire loan principal.
- Monthly payments may vary, based on interest rate, principal loan amount and amortized interest of the life of the loan. Variations on monthly payments, during the interest only phase of the loan, can depend on the loan type (ARM for example).
- Typically, an interest only mortgage can be paid off at any time, without pre-payment penalties.
- An Interest Only loan has a wide array of variables. It is best to contact us so that your specific question(s) can be answered and additionally so that we can provide insight you may not be aware of.
Give us a call! One of our mortgage specialists would be happy to answer all of your questions and get you started with a great low rate today.
Working with MC Mortgage Group
- We put YOU first. We are committed to getting every client the very best possible deal every single time.
- MC Mortgage Group offers some of the most competitive rates in the Nation!
- Fast and efficient. We close most of our loans in 30 days or less.
- We offer a variety of loans. MC Mortgage will find you the loan that is right for you!!!