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Pros and Cons of Interest Only Mortgage Loans
from:Once you find the house of your dreams, you're going to have to start thinking about mortgage loans. While you can get help finding the right loan by visiting a mortgage broker, they will still give you various options to choose from. One option you may come across during this experience is interest only mortgage loans. These loans are usually an option to another identical and traditional loan. For instance, you could be offered a certain loan with a bank, and they give the option to make it an interest only loan as well. Then, it is up to you, with the help of your mortgage broker, to decide if interest only mortgage loans are right for you.
Essentially, with interest only mortgage loans, you will only be paying the interest on your loan for a set number of years. This is usually either five or ten years. For this period, in the beginning of your loan, you only pay interest. This can lower your monthly payments significantly. On the downside, during this period, unless you pay more than the minimum monthly payment, you won't be reducing your mortgage loan amount. That causes you to have no equity on your home where you would have with a traditional mortgage loan.
There are upsides and downsides to interest only mortgage loans. They should only be used if you get a significant benefit from it. For example, if you are looking for a house that is more expensive than you could afford, you can often qualify for more expensive houses with interest only mortgage loans. Then again, you should only choose this route if you plan to live in the house for the length of the loan; either fifteen or thirty years. If you want to sell the house after only a few years, you'll find that you haven't made any money on the deal because you were only paying interest and not reducing the loan.
Another way that interest only mortgage loans are good is because the monthly payment is lower than normal while you're in the interest only period. If you have a low income, but expect that things will get better, this can be a good option. Before you decide to choose one of these kinds of loans, you should do as much research as possible. A good, licensed mortgage broker will have a lot of information for you. They will have good advice and will be able to evaluate whether or not this would be a good idea both in the short and long term.
Low Mortgage Loans News
Mortgage Rates for 30-Year US Loans Fall to a Record-Low 3.78% - Bloomberg
 OregonLive.com | Mortgage Rates for 30-Year US Loans Fall to a Record-Low 3.78% Bloomberg US mortgage rates for 30-year loans fell to a record low for a fourth straight week, reducing borrowing costs as a housing recovery takes hold. The average rate for a 30-year fixed mortgage dropped to 3.78 percent in the week ended today from 3.79 ... 30-year mortgage rate hits another record low US 30-year mortgage rate falls to record 3.78 pct. Freddie Mac: 30-year mortgage rate down a tick at 3.78% |
MBA Weekly Survey: Refinance Applications Increase Because of Record Low ... - LoanSafe
 Eastern Morning Herald | MBA Weekly Survey: Refinance Applications Increase Because of Record Low ... LoanSafe The Market Composite Index, a measure of mortgage loan application volume, increased 3.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3.3 percent compared with the previous week. Mortgage Rates: Low Mortgage Rates Spark Increase in New Home Sales Record-low mortgage rates spur refinancing HSH.com Weekly Mortgage Rates Radar: Fixed Mortgage Rates at New Record Low Again |
Bankrate: Mortgage Rates Hold at Record Lows - MarketWatch (press release)
 e-wisdom.com | Bankrate: Mortgage Rates Hold at Record Lows MarketWatch (press release) NEW YORK, May 24, 2012 /PRNewswire via COMTEX/ -- Mortgage rates were little changed, remaining at record low levels. The average rate on the benchmark 30-year fixed mortgage rate was unchanged at the record low of 3.97 percent according to ... Refinance Applications Increase in U.S. for Third Consecutive Week, Driven by ... Mortgage rates drop to new record lows, mortgage activity jumps Even Lower Interest Rates Keep Refi's Rolling |
Mortgage Q&A: Borrowers hit by mess others made - Washington Times
 Washington Times | Mortgage Q&A: Borrowers hit by mess others made Washington Times The Home Affordable Refinance Program (HARP), initiated a couple of years ago, was designed to help folks with good credit and an evident ability to repay their loans. They were unable to refinance to a lower rate, however, because their property ... Don't HARP on it, refinance program too good to pass up |
Another week, another record low for mortgage rates - Bizjournals.com
Another week, another record low for mortgage rates Bizjournals.com Average mortgage rates hit another record low this week, dropping to 3.78 percent for a 30-year fixed loan. The average rate on a 30-year fixed-rate mortgage fell slightly to another new record low this week, according to Freddie Mac's (OTC BB: FMCC) ... |