1. You are a First Time Buyer and cannot Qualify. For the first few years of purchasing a home, most of the mortgage you pay goes towards interest, not principal. With the interest only payment option, the lower payments are more manageable and you can use the money you save to pay off other debts or make investments.
2. Cannot find anything in your price range: An interest only loan can increase your purchasing power.
3. If you are Retired and living on a fixed income, interest on home loans to meet additional cash flow to provide your needs in life.
3. When you buy a "flipper and" or live in an area where home prices are appreciating rapidly, you may want a loan only 1-10 years and will invest the money elsewhere.
The only interesting option may slightly increase your interest rate, or you can hire a tax of 125% of the loanand maintain the interest rate reduced.
Here is what would the difference in monthly payments with an interest only home loan look like this:
Loan amount 180,000 $ / 30 Year Fixed Home Loan / interest rate of 7%
Principal and interest: $ 1197.54
Interest payments only: $ 1050
Difference: $ 147.54
If you take that monthly savings and invest in an annual return of only 8%. Of Collected at the end of 10 years an investment of $ 27,319.
At the same time, if you would shave the repayment and interest, the $ 6526.19 on the most important. Although it is still a debt of $ 173,473.81 to pay for a loan of $ 180,000, even after 10 years, dass
No wonder that more and more people are home loan interest only choice.
Here are some things to consider about this type of loan.
The> An interesting option is usually only for the first 5 to 10 years of the loan after the loan has a repayment schedule for the third shorter. After ten years of the loan is fully amortized for the remaining 20 years. You can pay directly and clearly.
At this point you can continue to pay the higher fee, or you can refinance. In fact, they're always interested in refinancing only if you choose. Remember, until the end of the decade, theirIncomes should have increased significantly and you should be able to make payments on the increased amount. Or, you can sell the house to collect the winnings.
Mortgage interest is not limited to a fixed rate loan for 30 years. There are several ways: eg. Interest Only ARM, the interest rates for jumbo loans, or even a single interest home equity loan.
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