California Home Loans: Does the Interest Only Mortgage Make Sense?

Gil Mackey
LoanBiz Columnist

Article Rating , 4 out of 5 based on 1 votes

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 California home loan you want. An interest only loan calculator will help you see how much you would pay in interest, as well as how much your principal payments would be. An interest only loan calculator will also show you how your payments are applied to the mortgage balance over the term of the home loan.

California Home Loans: Comparison Shopping

Not all California home loans are the same -- what's right for your neighbor might not be right for you. Your best option is to shop around with different mortgage lenders and compare your choices. Use an interest only loan calculator to better understand how this home loan works, and compare it to other mortgage types. As you compare California home loans and talk with different mortgage lenders make sure to ask plenty of questions. Take the time to understand your options before you make a decision.

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.

Editor's Selections: Additional Reading
Related Articles & Tools
Quick Survey

Your answer: 
Correct answer: 

Total votes: 

Mortgage Industry Update Keep up with the latest industry buzz.

Email this article

Please fill in a valid name.
Please fill in a valid e-mail.
Please fill in a recipient name.
Please fill in a valid recipient e-mail.
Email loading...