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Interest Only Loans
Today, borrowers shopping for a new home loan, a debt consolidation loan, a bad credit loan, a home-equity loan, or any sort of financing truly have more options than ever before. Today, it is possible to get home loans with terms of 10 years all the way up to 50 years and more. One of the more unique options when getting a new home loan, a second mortgage loan, or mortgage refinancing is the range of interest only loans available. Interest only loans, as the name implies, require you to pay only the interest on your loan amount. You do not pay off your principal. This has a number of advantages. Interest only loans offer very low monthly payments. They can also help to defer paying off the bulk of your mortgage until your financial situation improves. Interest only loans are good for situations in which someone wants to buy a home right away but cannot easily afford a home. Interest only loans essentially give them time to get their financial status in order before paying off the principal. Of course, interest only loans are not for everyone. Since they do not require you to pay off the principal every month, your total loan amount does not decrease. This means that you may have to accept interest only loans for longer terms. In the long run, interest only loans can end up being more expensive as the total borrowed amount does not decrease significantly – and you have to keep paying interest on the total amount. In general, people should only take out interest only loans for the short term, with the understanding that as their financial status improves they will start paying off the principal amount on their new home loan or their mortgage refinancing loan. Interest only loans can be right for some people. Speak with your financial advisor to determine whether interest only loans are for you. You may be able to get interest only loans that function as a debt consolidation loan, a new home loan, a mortgage refinancing option, or as a second mortgage loan. Only by talking to a professional and considering all your options -- including interest only loans -- can you determine which home financing is right for you.