Interest Only Mortgage Lenders

What is an interest only mortgage loan?

Before discussing what an interest only mortgage loan is, it is important to understand a few common terms. Firstly, interest is the percentage of the loan that the lender charges the borrower for being able to use their money to purchase a home. Next, principal is the amount of money that it will take to pay off the initial amount minus the interest. Often, people discuss principal in terms of their monthly payments because a portion of your final monthly mortgage payment goes to pay off the principal (the amount remaining on the original loan), the interest (the lender’s fee for providing the loan), homeowner’s insurance, and a variety of other fees. That means that an interest only loan is a loan that gives borrowers the flexibility to pay only the interest rather than the interest and principal. An interest only loan gives borrowers the cash that they may need each month to pay off high interest credit cards, medical bills, or other monthly expenses while still accruing equity in their homes. These loans, however, are typically used for the short-term. Lenders often offer interest only loans for three to ten years, and after that designated period ends, the borrower must begin to pay the principal in addition to the interest.

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Credit.

An interest only mortgage loan may be a saving grace for many people with a significant amount of debt. These loans allow consumers to use the money that would ordinarily go toward their principal to go toward high interest credit cards or other paralyzing debt. These loans, however, are slightly more particular when it comes to approving candidates. If you have less-than-perfect credit, you may want to start researching early. You will also want to begin to pay all of your bills on time each month. It would also be helpful to make sure that all of the items on your credit report are accurate, and that you keep a low balance on each of your credit cards. These factors are all important when being considered for any loan.

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Relief.

Upon being approved for your interest only home loan, you will have the peace of mind and satisfaction that comes from having purchased your own home, invested in your financial future, and possibly consolidated overwhelming debt. Financial freedom takes a lot of dedication and effort, but its results are absolutely worthwhile.

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