Is it an Interest-Only, Negative Amortization, or Option ARM Loan?
These days many people get put into loans that start with a lower monthly payment, but that have completed terms and for which the monthly payment will definitely go up. With interest only loans, you pay and pay, but none of your payments go to pay off your loan, all of it goes to interest. With interest only loans, your payment will go up significantly after a few years. With Negative Amortization loans, you don t even pay all the interest that is due. So even though you make your payment every month, the amount you owe on the loan goes up! Option ARMs give you a choice every month of paying less than the interest due, just the interest, or the interest and principal. Even though these choices may have a lower starting payment, your payment will go up and then you will probably want to refinance again, incurring more closing costs. • Will your monthly payment include insurance and taxes? Make sure you know this information when evaluating loan offers. If the new monthly payment does n
