Mortgage : Home Loans : Refinance : Home Equity Loans

By Ben Afzal

Mortgage Basics

A typical mortgage loan, such as a 30 year fixed loan, requires you to pay off your principal balance slowly over time. Each month your monthly payment consists in part of an interest payment and in part a payment towards the principal of the loan. Slowly over time you pay the loan off. In 30 years the loan will be entirely paid off.

Interest Only Mortgages

An interest only mortgage is a very popular option these days with borrowers.

In this loan type a borrower only pays the interest and not the principal.

The monthly payment is lower than on a comparable loan of the same size and interest rate. The principal balance of the loan will not increase or decrease. As long as interest only payments are made the loan size will remain the same.

Loan Options

There are many new interest only loan options.

There is an interest only option on a 30 year fixed loan. It allows a borrower to make interest only payments for the first 10 years of the mortgage. The interest rate remains the same throughout the 30 year term of the loan. This type of loan offers the borrower the security of a fixed interest rate with the advantage of a lower payment in the first several years.

There are even newer mortgages that allow for an interest only payment for the entire 30 year term of the loan. At the end of the loan term in 30 years you will still owe the same amount that you started with. In theory your property price may have increased substantially so you will still have gained equity on your property.

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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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This entry was posted on Thursday, October 19th, 2006 at 4:20 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.