Who Is an Interest-Only Home Loan For?
There are a number of reasons people consider interest-only loans. For instance, it might make good financial sense. On a traditional 30-year fixed, roughly 70% of the payment goes toward interest during the first six or seven years of the loan. If your interest rate is low, then you’ve borrowed money at a good rate. Instead of paying down that low rate loan, the extra money each month from making interest-only payments can be investe in something that would bring a higher rate of return. Depending on the loan amount, you could have access to thousands of dollars over the course of several years to invest or reduce high interest debt, including credit card debt. An interest-only home loan is sometimes considered an option for people who expect to be in their homes for less than ten years. The average homeowner stays in their home between five and seven years. As mentioned before, home mortgage payments are mostly interest for the first years of the loan. Many homeowners like the option
