| There's some appeal to an interest-only
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| | your property doesn't increase over those
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| loan. The initial monthly payments are
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| | first few years, it's going to be harder
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| lower, making the loan seem affordable.
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| | to negotiate better loan terms.
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| It works by allowing home buyers to pay
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| | Remember, with the slowing housing
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| just the interest on their loan for an
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| | market, those fast appreciations in the
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| initial period of 3, 5, 7 or even 10
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| | early part of this decade are gone,
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| years (negotiable with your lender). At
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| | meaning refinancing will be hard. And if
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| the end of the interest period, the
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| | your income doesn't increase
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| monthly payments are then increased to
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| | dramatically, those larger payments can
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| include both the interest and the
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| | become an insurmountable burden.
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| principal.
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| | In short, if you're planning to remain in
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| So, once that first term of interest-only
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| | the home long-term, an interest-only loan
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| payments ends, the monthly payments are
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| | probably isn't for you. If you want to
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| going to increase. The borrower is left
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| | free up funds to invest, but you're
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| with 20-25 years to pay off the balance
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| | planning to sell or refinance the home
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| on their mortgage instead of the typical
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| | before the interest-only period ends,
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| 30 years. The new monthly payment is
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| | then an interest-only refinancing may be
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| higher because now there's less time to
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| | helpful after all.
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| pay off the loan's complete, amortized
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| | If you've already refinanced with an
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| amount. That increased payment can be a
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| | interest-only loan, consider talking to a
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| problem for people refinancing on lower
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| | mortgage specialist to discuss your
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| or fixed incomes.
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| | future refinancing options. When
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| Interest-only mortgages are on the rise,
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| | evaluating your action plan, consider how
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| but borrowers need to understand how to
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| | long you want to stay in the house and
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| use that financing properly. In this
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| | the realistic picture of how much you can
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| article, we'll talk about the benefits
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| | afford to pay.
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| and drawbacks of interest-only
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| | In the meantime, keep your credit rating
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| refinancing loans, along with the factors
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| | high so you have more renegotiation
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| you should consider before you sign for
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| | power, and try to make extra payments
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| one.
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| | toward the principal now before your
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| Most people opt for interest-only loans
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| | interest-only period ends. You can offset
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| with the expectation that their finances
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| | those increased payments and make a big
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| will improve, they can sell in the future
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| | dent in the principle.
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| or renegotiate. However, if the value of
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