An Interest-Only Mortgage may offer benefits for homebuyers looking for lower monthly payments and borrowers whose income may not be consistent during the year.
Benefits of an Interest-Only Mortgage:
- Provides borrowers with an initial interest-only payment period.
- Gives monthly payment flexibility during the interest-only term of the loan.
- Payments to the principal can be included at any time.
- Options are available to customize the loan to fit the unique needs of the borrower.
What Is an Interest-Only Mortgage?
An Interest-Only Mortgage offers borrowers the flexibility to pay only interest during the interest-only term of the loan. After the initial interest-only term ends, the monthly payment changes to include both principal and interest for the rest of the loan term.
Is an Interest-Only Mortgage Right for Me?
Interest-Only Mortgages are unique and not the right fit for every borrower. Borrowers should be aware of the following:
- The principal balance is not reduced when you pay only interest.
- The monthly payment will increase after the initial interest-only term ends.
- After the interest-only term ends, the monthly payment will be higher than that of a fully amortized loan made at the same time.
- An experienced Mortgage Loan Originator can review your loan options with you to determine which type of loan meets your financial goals.