California Home Loans: Does the Interest Only Mortgage Make Sense?
Gil MackeyLoanBiz Columnist
The interest only mortgage
has grown in popularity recently, but is not a new mortgage product. Here are a
few things you should know.
Interest Only Mortgage
Details
An interest only home loan gives you the option of making only
the interest payments on your mortgage for an introductory period of time. Once
the interest-only period expires, the entire loan balance is re-cast, or
re-amortized over the remaining term of the loan. For example, a principle and
interest payment on a $300,000 loan amortized over 30 years is about $1,996,
while an interest-only payment would be $1,750.
Borrowers who make the interest-only payment for 5 years
will have to amortize that same $300,000 over 25 years, increasing the payment
by $370 a month, and those who make interest-only payments for ten years will
see an increase of nearly $576.
Interest Only Loan Calculator
Use an interest only loan calculator to find out exactly how
much you'd save each month on the
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About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing, he writes for his local paper, and lives with his two children in Nevada.
