What are "interest only" mortgages?

Written by Syd Johnson


Mortgages are considered to be “interest only” if your monthly payment does not coverrepparttar entire loan payment due, that isrepparttar 112107 mortgage interest and a payment to decreaserepparttar 112108 loan principal.

Every month you are payingrepparttar 112109 interest only and this means thatrepparttar 112110 loan is literally not going away. The purpose of setting up an interest only loan is to giverepparttar 112111 customerrepparttar 112112 lowest possible monthly payment while still maintainingrepparttar 112113 loan.

Cannot affordrepparttar 112114 full monthly payment? If you are in a position where you cannot affordrepparttar 112115 full monthly payment, a lender might allow you to payrepparttar 112116 mortgage interest forrepparttar 112117 first couple of years and thenrepparttar 112118 loan will be fully amortized at a future date. If you do get an interest only mortgage try to makerepparttar 112119 interest only period as short as possible.

Make a projection: can you pay two years intorepparttar 112120 loan? If you cannot get out ofrepparttar 112121 interest only cycle within a year or two then perhaps you are not in a financial situation where you can handle a mortgage. Another option is to get smaller home loan so that you can affordrepparttar 112122 full loan payments as soon as you close escrow.

Many consumers will find that when they get preapproved for a home loan,repparttar 112123 amount might be more than what they need, or more than they can realistically afford.

Full monthly payments will be higher than if you start paying on day one Oncerepparttar 112124 interest only period is up and your loan is fully amortized, be prepared for some sticker shock. Onrepparttar 112125 average loan, sometimes one half or more ofrepparttar 112126 monthly payment goes towardsrepparttar 112127 mortgage interest, and only a fraction ofrepparttar 112128 actual payment goes towards paying offrepparttar 112129 loan.

Anyone can get free mortgage quotes online

Written by Syd Johnson


If you are looking a purchase a home inrepparttar near future you can get free mortgage quotes online and offline. If you have an existing relationship with a bank or credit union, you can contact their customer service department or walk into a branch office and speak with a loan officer.

Once you provide some preliminary information, you will get a mortgage quote. This quote is not binding, but it is a great start when you’re shopping for a home loan.

Your credit history and income is key to getting accurate quote To give yourepparttar 112106 most accurate mortgage quote, you must provide your credit history, current income, work history forrepparttar 112107 past two years and a list of your current assets if you want them to be considered inrepparttar 112108 analysis of your financial eligibility. You can also play around withrepparttar 112109 numbers to see how changing your down payment could impactrepparttar 112110 amount ofrepparttar 112111 loan that you can get.

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