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  • Will You Add? - Frequently Asked Questions About Interest Only Loans

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    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner inten

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    Interest only loans should be considered before making a home purchase. However, many prospective homeowners have quite a few questions about this type of loan. This article compiles some of the most frequently asked questions about interest only loans.

    What is an Interest Only Loan?

    An interest only loan is a loan which requires that the borrower repay only the interest on the loan during a specified time period. This time period is usually only a portion of the loan period and for a 30 year mortgage the interest only period may only be five or ten years. At the conclusion of the interest only period, borrowers who have not opted voluntarily to repay a portion of the principle will still owe the entire amount borrowed.

    Is an Interest Only Loan Right for Me?

    An interest only loan is considered to be a good idea for homeowners who will benefit from lower payments now but are prepared to deal with repaying the entire loan amount over a shorter period of time in the future. This might include homeowners who are looking to purchase a more expensive house in the near future, homeowners who want to invest the additional cash flow and even homeowners who simply need a little extra cash flow right now.

    What Should I Consider when Evaluating an Interest Only Loan?

    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner inten

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    loan which requires that the borrower repay only the interest on the loan during a specified time period. This time period is usually only a portion of the loan period and for a 30 year mortgage the interest only period may only be five or ten years. At the conclusion of the interest only period, borrowers who have not opted voluntarily to repay a portion of the principle will still owe the entire amount borrowed.

    Is an Interest Only Loan Right for Me?

    An interest only loan is considered to be a good idea for homeowners who will benefit from lower payments now but are prepared to deal with repaying the entire loan amount over a shorter period of time in the future. This might include homeowners who are looking to purchase a more expensive house in the near future, homeowners who want to invest the additional cash flow and even homeowners who simply need a little extra cash flow right now.

    What Should I Consider when Evaluating an Interest Only Loan?

    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner inten

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    ntarily to repay a portion of the principle will still owe the entire amount borrowed.

    Is an Interest Only Loan Right for Me?

    An interest only loan is considered to be a good idea for homeowners who will benefit from lower payments now but are prepared to deal with repaying the entire loan amount over a shorter period of time in the future. This might include homeowners who are looking to purchase a more expensive house in the near future, homeowners who want to invest the additional cash flow and even homeowners who simply need a little extra cash flow right now.

    What Should I Consider when Evaluating an Interest Only Loan?

    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner inten

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    period of time in the future. This might include homeowners who are looking to purchase a more expensive house in the near future, homeowners who want to invest the additional cash flow and even homeowners who simply need a little extra cash flow right now.

    What Should I Consider when Evaluating an Interest Only Loan?

    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner inten

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    b>

    When evaluating an interest only loan it is very important to consider future interest rates. While these rates cannot be known it is possible to perform an analysis on interest rate scenarios to estimate how high interest rates will rise and how quickly they will rise. This is especially important if the homeowner intends to remain in the home beyond the interest only period of the loan.

    What Risks are Associated with an Interest Only Loan?

    There are some risks which are associated with an interest only loan. Specifically if housing prices drop and the homeowner needs to sell his home at a lower price he will need to come up with additional cash to repay the original loan. Additionally, interest only loans with an adjustable rate are subject to increases in interest rates which can increase the monthly payment.

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