ve year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment Interest only mortgages have become extremely popular with homeowners needing the lowest possible payment. There are risks associated with interest only mortgages; homeowners who fully understand what they’re getting into can save themselves thousands of dollars. Here are several tips to help you decide if refinancing with an interest only home loan is right for you.

As the name implies, an interest only mortgages have payments based only on the amount of interest due in a given month. Because there is no loan principle included in the payment, your amount will be much lower than with a traditional mortgage. The catch with an interest only mortgage is that the payments do not remain interest only forever; at the end of the interest only period, usually five years, your lender converts your loan to a standard Adjustable Rate Mortgage at the going rate.

The problem you’ll face when this happens is that your loan will be amortized for the time remaining on your loan. Suppose you refinanced your home with a 30 year interest only mortgage with a five year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment s

e are several tips to help you decide if refinancing with an interest only home loan is right for you.

As the name implies, an interest only mortgages have payments based only on the amount of interest due in a given month. Because there is no loan principle included in the payment, your amount will be much lower than with a traditional mortgage. The catch with an interest only mortgage is that the payments do not remain interest only forever; at the end of the interest only period, usually five years, your lender converts your loan to a standard Adjustable Rate Mortgage at the going rate.

The problem you’ll face when this happens is that your loan will be amortized for the time remaining on your loan. Suppose you refinanced your home with a 30 year interest only mortgage with a five year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment

luded in the payment, your amount will be much lower than with a traditional mortgage. The catch with an interest only mortgage is that the payments do not remain interest only forever; at the end of the interest only period, usually five years, your lender converts your loan to a standard Adjustable Rate Mortgage at the going rate.

The problem you’ll face when this happens is that your loan will be amortized for the time remaining on your loan. Suppose you refinanced your home with a 30 year interest only mortgage with a five year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment

our loan to a standard Adjustable Rate Mortgage at the going rate.

The problem you’ll face when this happens is that your loan will be amortized for the time remaining on your loan. Suppose you refinanced your home with a 30 year interest only mortgage with a five year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment

ve year interest only period. At the end of the five years the lender will set your payment amount based on the remaining 25 years; this results in a significantly higher payment amount. If you’re unprepared for the higher monthly payment you could experience payment shock when the bill arrives.

Loans for the Short Term

Interest only mortgages are great for homeowners that need short term financing on investment properties or homes they will not be keeping long term. The interest you pay for this financing is fully-deductible on your federal income tax. Interest only mortgages are also useful for homeowners experiencing a temporary drop in income or financial problems. You can learn more about your mortgage refinancing options, including costly mistakes to avoid with a free refinancing tutorial.