Home Loans
Mortgage Refinancing Information: Interest Only Mortgage Basics
(presented by www.refinance-refinance.net - mortgage lenders)
By Louie Latour
If you are considering mortgage refinancing but need the lowest payment amount possible, an interest-only mortgage could be your answer. When used correctly, interest only mortgages are an excellent tool for meeting a short-term financial need. Here are the basics of interest-only mortgage refinancing to help you decide if this loan is right for you.
How Does Interest Only Mortgage Refinancing Work?
Interest-only mortgages have initial payments based only on the amount of interest due for a particular month. Because there is no loan principle included these loans have very low monthly payments during the interest only period. Interest-only mortgages are not interest-only forever; the lender is eventually going to want their money back.
When the interest-only period ends the lender will convert your mortgage into a standard Adjustable Rate Mortgage amortized for the remaining loan term. This means that if your loan was for 30 years with a 5 year interest only period, the full amount of your loan will be amortized for 25 years of repayment. This shorter amortization schedule means you will have a much higher payment amount when the lender converts your loan.
When Does Interest Only Mortgage Refinancing Make Sense?
Interest-only loans are ideal for homeowners in need of short term financing. By refinancing or selling your home at the end of the interest-only period you can avoid a potential budget crisis and save yourself some money for the short-term. Interest-only loans are an excellent financial tool if you understand the risks associated with any Adjustable Rate Mortgage.
What Are the Risks of Interest-Only Mortgage Refinancing?
ing thei
r homes to foreclosure when the payment becomes unmanageable. Adjustable Rate Mortgages carry the additional risk of rising payments when interest rates go up.
You can learn more about your mortgage refinancing options, including common mistakes to avoid by registering for a free mortgage guidebook.
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To get your free mortgage guidebook visit RefiAdvisor.com using the link below. Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing - What You Need to Know,” which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com. Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com |
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