How does an interest-only mortgage work?
• Interest only loans were the norm at the time of the Great Depression of 1929. People made interest payments on their mortgage until the final balloon payment was due. There are many more mortgage options available now. Currently about half of the mortgages written are adjustable rate or interest only. Interest only mortgages might be beneficial for people in markets where houses appreciate rapidly and the plan is to remain in the house for only a couple of years. The risk is if the house depreciates in value. This answer is (useful somewhat useful incorrect offensive/spam) Add new answer Add new question Email me when a new answer is posted Top • With an interest-only mortgage loan, you pay only the interest on the mortgage in monthly payments for a fixed term. After the end of that term, usually five to seven years, you either refinance, pay the balance in a lump sum, or start paying off the principal, in which case the payments jump skyward. An interest-only mortgage might be a go
Interest Only mortgages have become very popular recently. There are many programs that offer the Interest Only option, but the basic idea is always the same. They are excellent programs for clients who are paid in bonuses, or just want to keep their monthly expenses as low as possible. IO loans can also be good for clients who wish to build equity quickly in their homes.
