Interest Only Loan
The interest only mortgage loan is the newest mortgage product to enter the mortgage industry. Each month, the mortgage lender requires that only interest be paid on the principal amount of the loan. Therefore monthly mortgage payments are reduced versus other mortgage programs. The lender collects property taxes, hazard insurance, and mortgage insurance with the interest payment each month. A change in taxes or insurance can change the monthly mortgage payment.
Terms are specified by the lender and interest can only be paid on the principal for an initial period; also set by the lender. After the initial period, the principal is then amortized over the remainder of the term. Pricing for interest only mortgages is based on US Treasury bonds or the LIBOR index. Interest only mortgage programs are available for:
"Tip"
Build equity in your home by paying extra each month.
Equal Housing Lender