The final type of mortgage I want to tell you about is the interest only loan. I am a real big fan of this loan. But it can be a little risky. It all depends on if you are buying a house for investment purposes or if you are buying a house to live in permanently. The interest only mortgage plan should be used carefully and after learning everything about it. The interest only mortgage loan was created for people who are paid by commission. Since they make more money some months than other months, this gives people the flexibility to pay more or less depending on how much money they made that month. The minimum of course is the interest amount. Listen
Interest only loan is a type of loan where you are not required to pay a portion of the principle. My figure previously indicated that on a $300,000 loan with a 6% interest rate, you would have a mortgage payment of $1798.65 a month. If you were to do an interest only loan, you would only be paying $1500 a month. That is almost $300. But keep in mind that you are only paying the interest so your loan balance stays the same. Listen
Other things to keep in mind is that this is only good with loan types such as the 5 year arm. So for 5 years you would have the lower interest rate, while paying only the interest. After five years, you would be required to start paying towards the principle and your interest rate would go up. Most people in this situation would probably sell and move to a house and start a different mortgage, or they would refinance the current loan to make it a new loan.