Home Loans
Ohio Home Equity Loans Interest Only Home Equity Loans
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By Jane A. Hale
Layoffs, small business failures, and other economic problems have led to tough times for many Ohio residents. If you need some fast cash, but don’t have the funds necessary to make large monthly payments on the amount you have borrowed, you may want to consider getting an interest only home equity loan. These Ohio home equity loans have many benefits for homeowners and lenders alike.
How an Interest Only Home Equity Loan Works
With a regular Ohio home equity loan, you make payments on both the interest and the balance of the loan. Interest only loans work differently. These loans give you the option of paying only the interest on the loan for the first few years. Interest only periods can last anywhere from one to ten years. Once the period has ended, you can start making regular payments or choose to refinance the loan.
As you can imagine, paying only the interest makes for much lower monthly payments, allowing you to use the money you save for other purposes. This type of Ohio home equity loan is very beneficial for those who need to borrow large sums of money with low payments, those who are building equity through home improvements, and those who plan to sell their home within a short period of time.
Drawbacks of Interest Only Home Equity Loans
The drawback to interest only home equity loans is the fact that it will probably cost you more in the loan run to pay the loan off. Rates on traditional Ohio home equity loans currently average 7.56 percent. With an interest only loan, you may be paying a rate that is slightly higher. And, even if the loan rate is lower, you still miss out on the opportunity to pay on the balance for the first few years. After ten years, you may still owe the same amount as you did when you took out the loan.
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