Is an Interest-Only Loan the Right Loan For You?
Interest-only loans have been generating a lot of interest over the last couple of years. As they become more readily available to the average consumer, more and more people are considering interest-only loans as a possible solution to their financial needs. But interest-only loans are simply not for everyone.
During the initial interest-only term of the loan, borrowers experience lower than average monthly payments. These payments may fluctuate based on the highs and lows of the market, but typically remain much lower than those of a traditional mortgage. But what happens after the interest-only period has passed?
Depending on the loan and the lender, borrowers have a few options after the interest-only period of an interest-only loan has expired. They may choose to pay the entire balance in full, which can be a huge financial burden. They may choose to refinance, in which case new loan-processing fees and closing costs enter the fray. Or they may choose to make payments on the balance for the remainder of the loan term, at which point the monthly payments skyrocket. So, who exactly would benefit from an interest-only loan the most?
• THOSE WHO WORK FOR IRREGULAR COMMISSIONS OR BONUSES
Lower monthly payments allow these borrowers to keep up during lean months and make larger payments when bonus time comes around.
• THOSE WHO WILL BE GENERATING SUBSTANTIALLY MORE INCOME IN THE NEXT SEVERAL YEARS
Career fast-trackers who will generate more income will be more able to handle the increased monthly payments after the interest-only period has ended.
• THOSE WHO WILL INVEST THE SAVINGS GENERATED BY AN INTEREST-ONLY LOAN
Those who place the savings generated from an interest-only loan over a traditional mortgage into an investment vehicle with a high confidence of return will be more capable of handling the principal payments, and may even be able to pay off the entire balance at once.
• THOSE WHO LIVE IN AN AREA WITH A HIGH-COST HOUSING MARKET
Some regions (such as those on the East and West Coasts) have particularly high-cost housing markets. Low interest-only payments allow borrowers to afford homes more easily in such inflated housing markets.
• THOSE WHO EXPECT TO MOVE BEFORE THE INTEREST-ONLY PERIOD IS OVER.
Those who expect to live in a home for only a few years would do well to consider an interest-only loan. They will benefit from low interest-only payments without the soaring costs afterwards.
As you can see, interest-only loans aren't tailored for everyone. The initial savings offered by interest-only loans are tempered by the deferred principal payments that come due afterward. Whether an interest-only loan seems like it may be a good fit or not, if you're thinking about refinancing your mortgage or looking for a home, please give me a call at 213-700-1968 today! There's no reason to box up your financial goals and wait around. Visit my website www.go2themortgagepro.com and see all that I have to offer!
Sincerely,
L. D. Walls, The Mortgage Pro!
23272 Mill Creek Dr., Suite #100
Laguna Hills, CA 92653
213.700.1968
EMAIL: stocktec1@go2themortgagepro.com
WEB SITE: http://www.go2themortgagepro.com/Intro.aspx
BLOG SITE: http://www.themortgagepro.blogspot.com/
During the initial interest-only term of the loan, borrowers experience lower than average monthly payments. These payments may fluctuate based on the highs and lows of the market, but typically remain much lower than those of a traditional mortgage. But what happens after the interest-only period has passed?
Depending on the loan and the lender, borrowers have a few options after the interest-only period of an interest-only loan has expired. They may choose to pay the entire balance in full, which can be a huge financial burden. They may choose to refinance, in which case new loan-processing fees and closing costs enter the fray. Or they may choose to make payments on the balance for the remainder of the loan term, at which point the monthly payments skyrocket. So, who exactly would benefit from an interest-only loan the most?
• THOSE WHO WORK FOR IRREGULAR COMMISSIONS OR BONUSES
Lower monthly payments allow these borrowers to keep up during lean months and make larger payments when bonus time comes around.
• THOSE WHO WILL BE GENERATING SUBSTANTIALLY MORE INCOME IN THE NEXT SEVERAL YEARS
Career fast-trackers who will generate more income will be more able to handle the increased monthly payments after the interest-only period has ended.
• THOSE WHO WILL INVEST THE SAVINGS GENERATED BY AN INTEREST-ONLY LOAN
Those who place the savings generated from an interest-only loan over a traditional mortgage into an investment vehicle with a high confidence of return will be more capable of handling the principal payments, and may even be able to pay off the entire balance at once.
• THOSE WHO LIVE IN AN AREA WITH A HIGH-COST HOUSING MARKET
Some regions (such as those on the East and West Coasts) have particularly high-cost housing markets. Low interest-only payments allow borrowers to afford homes more easily in such inflated housing markets.
• THOSE WHO EXPECT TO MOVE BEFORE THE INTEREST-ONLY PERIOD IS OVER.
Those who expect to live in a home for only a few years would do well to consider an interest-only loan. They will benefit from low interest-only payments without the soaring costs afterwards.
As you can see, interest-only loans aren't tailored for everyone. The initial savings offered by interest-only loans are tempered by the deferred principal payments that come due afterward. Whether an interest-only loan seems like it may be a good fit or not, if you're thinking about refinancing your mortgage or looking for a home, please give me a call at 213-700-1968 today! There's no reason to box up your financial goals and wait around. Visit my website www.go2themortgagepro.com and see all that I have to offer!
Sincerely,
L. D. Walls, The Mortgage Pro!
23272 Mill Creek Dr., Suite #100
Laguna Hills, CA 92653
213.700.1968
EMAIL: stocktec1@go2themortgagepro.com
WEB SITE: http://www.go2themortgagepro.com/Intro.aspx
BLOG SITE: http://www.themortgagepro.blogspot.com/
posted by The Mortgage PRO! @ 6:52 AM
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