If you are considering an interest only mortgage you will want to establish a term that is manageable. Many homebuyers choose to have an interest only mortgage that is converted to a traditional fixed or adjustable rate mortgage after a time of 5 10 years. This way, borrowers are not stuck with an interest only loan when they hope to be able to afford the larger monthly payments of a traditional loan further down the road.
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Only a qualified mortgage professional can truly help you determine whether or not an interest only mortgage is right for you. Beyond considering how long you intend to stay in your home, or what your monthly finances look like, there are other details the experience of a professional can offer you when it comes to less common interest only mortgages. Our free application will put you in touch with as many as four competitive mortgage quotes for your proposed loan. Feel free to contact us today.
Interest only mortgages are a less common type of home loan that many homeowners choose to begin the home ownership process with. As the name implies, borrowers with an interest only mortgage do not pay down their mortgage balance with their monthly payments they only pay interest. This obviously results in a smaller monthly payment. However equity will not be established in the home to use for the future.
If you intend to live in an area where there is rapid appreciation. You can still make money on the sale of your home if this appreciation continues once you move in. Although you will have no equity in your home when you go to sell with an interest only mortgage. Your home may be worth more money and you will still profit. The challenge in making money in an area where there has been appreciation is dependant on how long you are willing to hold out at a higher sale price that may take longer to sell. Your real estate agent should handle these details with you to establish a reasonable sale price.