Why would I want an Interest Only Loan
Anyone who is looking for an alternative to a Fixed Rate Mortgage will be interested in an Interest Only Mortgage. An Interest Only Mortgage allows you to spend the first portion of your payment term (the length of which is set in the contract) paying the interest on the loan. After that, you can begin paying off the principal, pay the total balance, or refinance. This type of mortgage is ideal for those looking to refinance after a short time.
What can I use an Interest Only Loan for, and what are my options for an Interest Only Loan
This mortgage is useful for situations where people want to start out with lower monthly payments, but can afford to pay higher payments when their interest period is over. However, it is not useful for building home equity because you will not be paying the principal on your loan for quite some time. It is not useful for people with fixed incomes who will not be able to make the higher payments after their interest only period.
Why should I get an Interest Only Loan
This type of mortgage helps people buy houses that are normally out of their budgets because it allows them to get larger loans. As mentioned earlier, the monthly payments will rise significantly after the interest period is over. Therefore, it is important that the borrower for this loan will either sell after the interest period, or will have a substantially higher income at that time. People in higher income brackets often use this type of loan. Like almost any other mortgage loan, there is risk involved. If the borrower elects an extended period for the interest payment term, the market could significantly change, and the borrower may not be able to sell the house for the amount he/she planned.
How would someone go about getting this type of mortgage
You can get it right now. Click here to fill out an application.
How can my FICO/Credit Score affect my mortgage rate
Your FICO and Credit Score are determining factors in your mortgage rate. Good Credit is essential for a good mortgage. Your mortgage rate could vary as much as a few points, just for having a lower FICO score. A score between 720 and 850 is good credit, or A-Paper. If you score below 660, you will have trouble finding a lender, but the absolute cutoff between Sub-Prime or Non-Prime lending and A-Paper is 620.
Looking for information on your credit score? There are services that will provide you with your credit score as well as a detailed credit report free of charge. Get your credit report today to learn about the loans and interest rates that you may qualify for.
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