Interest Only Home Mortgage
Interest only home mortgage products can be an excellent choice. Interest only home mortgage products are designed to offer the lowest payment as you are not paying toward the principal. The interest only home mortgage allows you to buy more home than a fully amortizing mortgage. An interest only home mortgage is flexible. Make additional payments toward your interest only home mortgage principal balance at any time. If you do, your payment will be lower as the payment is based on the current mortgage balance. This is different than with a fully amortizing loan where any additional contributions to principal do not change the payment.
Interest only home mortgage products were originally designed for individuals whose income is cyclical. For example, an individual who is a sales executive with a low base salary but commission payouts quarterly would benefit from an interest only home mortgage. You would have the lowest possible payment during months when no bonus is paid and would be able to make contributions to the balance when the quarterly bonus is paid. I am seeing individuals in many situations choosing an interest only home mortgage as a method of lowering their payment, sometimes significantly.
Interest only home mortgage products are available for a 30 or 40 year term, with the first 5 or 10 years interest only and the final 20 to 25 years fully amortizing although I am now seeing some progressive lenders offering this option on Interest Only Home Mortgage ARMs. Some lenders who offer an interest only home mortgage require a prepayment penalty for the first 1-3 years and have caps on the amount your rate can change at any time and over the life of the loan. I always try very hard to avoid prepayment penalties on these and other types of loans and can usually work around the requirement. Reduced documentation Interest only home mortgage loans are readily available as well.
Again, an interest only home mortgage is not the right choice for everyone, but it can be a very effective choice for some. Please give me a call or send an email and I will be happy to discuss this alternative with you.
An example of how powerful this tool can be:
If you want to make the comparison for your own specific
situation, calculators to find the
amortizing payment are available on this website. The math to find the
payment is, Loan Amount x Interest Rate / 12.
Of all of the programs available, the Cash Flow Interest Only Home Mortgage offers the greatest flexibility by far.
Read more about interest only home mortgage Closing Costs
I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.
As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.
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