Interest Only Mortgages
Over the past few years Interest Only loans have become very popular with homeowners. The reason for this popularity is simple, an interest only loan is one that gives you the option of paying just the interest or the interest and as much principal as you want in any given month. This means that you can make a smaller payment, leaving you able to spend the money you save as you see fit. Interest only loans are an important tool in the mortgage world. They enable homeowners to have a choice in how much or how little they pay every month.
When to choose an interest only loan:
- When you need lower monthly payments
- If you plan to keep your loan ten years or less, or if you are uncertain how long you will keep your loan
- If you want the security of a fixed rate but don’t want to miss out on a payment that is lower
Use the money you save to:
- Take cash out to pay off high-interest debt such as credit cards
- Invest for your retirement
- Make home improvements
- Save for your children’s college fund
Company Name offers a variety of interest only home loan options, including 30-year fixed-rate mortgages and adjustable rate mortgages. Our interest-only home loan programs are offered as interest only loans for periods of either three, five, seven or ten years.
Who Is an Interest Only Home Loan For?
There are a number of good reasons to consider an interest only loan when you are refinancing your current mortgage or purchasing a new home. On a traditional 30-year fixed-rate mortgage, roughly 70% of the payment goes toward interest during the first six or seven years of the loan. If your interest rate is low, then you’ve borrowed money at a good rate. This means the length of time you plan on spending in your home is a key consideration when deciding if an interest only loan is right for you.
If you are a more sophisticated borrower you can use the money you save with an interest only loan and could take the extra money you’d have each month from making interest only payments and invest it in something that would bring you a higher rate of return. Depending on your loan amount, this could mean you would have thousands of dollars at your disposal that would otherwise be going towards your principal. You have the ability to make your money work harder for you.
Low Closing Cost Loans in a Nutshell
Closing costs are fees related to the administration of a mortgage, such as underwriting fees or processing fees. Low closing cost loans claim to involve fewer of these charges than typical loans. The specific fees may vary depending on the loan program and the lender.
While closing costs should be disclosed in initial good faith estimates, there are some loan officers who try to spring these costs on borrowers at the end of the loan period, creating a high closing cost loan. Lenders who use this “bait and switch” tactic often blame increased costs on market fluctuations and other uncontrollable economic factors. Get as much information as you can regarding closing costs before entering an agreement to avoid being caught in this all-too-common trap.
Closing costs can also vary depending on the state or region in which you live. This is mainly due to different state taxes on mortgages. These taxes are generally in the form of a percentage and can be as high as two percent of the loan amount. Be aware of these taxes so you don’t get caught by surprise by extra fees.
What Makes a Good Low Closing Cost Loans?
The best low closing cost loans are those with closing costs that are no more than 3% of the entire value of the loan.
Who Should Look for Low Closing Cost Loans?
The low closing cost loan is the best option for people who wish to buy a home and stay there only for a short period of two to three years. It is also a good option for those looking to refinance their home.
More Facts About Low Closing Cost Loans
As mentioned earlier, low closing cost loans are simply those that involve lower final administrative fees. There are various ways to lower these closing costs. One way is to close your loan towards the end of the month. This way, you can avoid strung out fees when the lender tells you to pay for the days of interest from your closing date until the end of the month.
These are just a few facts about low closing cost loans. If you are looking for a low closing cost loan with the best rates, ask your personal mortgage consultant for direction. With their knowledge of the market, they can help you adjust the specifics of your loan to your particular situation.
