Child abused - Interest Only Mortgage Refinancing A Short Term Mortgage Solution
| p>Interest only mortgage loans offer lower monthly payments for a short period of time. If you are a homeowner in need of the lowest payment possible this type of mortgage could be your answer; however, interest only mortgage loans are frequently abused by homeowners who do not fully understand how they work. Here are several tips to help you decide if interest only mortgage loans are right for you. As the name implies, interest only mortgages have payments based on the amount of interest due on any given month. During this period of time you do not pay back any of the loan principle which means you ll get a lower monthly payment. Interest only mortgages are also easier to qualify for than traditional mortgages enabling many to purchase homes they would not oridinarily qualify. Sounds great right? The problem comes when the interest only period ends. Wait, what does that mean ends? Interest only mortgages are interest only for a fixed period of time, usually five years. At the end of this period the mortgage lender converts the loan to a standard Adjustable Rate Mortgage amortized for the remaining duration of the loan term. This means that not only is the mortgage principle added back into your loan, but the amortization is fast tracked for the time remaining in your loan contract. Your mortgage payment goes from an ultra-low interest only payment to a much higher fully amortized payment. If you re struggling to make ends meet every month with the interest only payment what happens when the lender starts adjusting your mortgage payments? If this describes your situation you should consider refinancing before this happens or you could potentially lose your home. When used correctly, interest only mortgages are an excellent tool for a short-term mortgage need. When abused they have the potential to create a financial nightmare. You can learn more about your mortgage options including costly mistakes you need to avoid with a free mortgage tutorial. |