You should weigh your options when considering an interest only loan. Don't hesitate to contact me to discuss your unique situation.

With most interest-only payment option loans, you can always pay extra towards the principal you owe at any time. When times are flush, pay down that principal. When times are tough, pay only the interest-only payment. You decide.

In areas with high appreciation such as 10% - 20% per year it's not necessary for a person to pay down the principle on a morgage to reap great profits in an investment property. This is where many people use I/O loans along with Neg-Am products.

Often times lower income borrowers or first-time homebuyers will apply for an interest only mortgage. This helps reduce their monthly mortgage cost while still being able to get into a home. Investors buying investment/rental properties will apply for interest only loans reduce monthly debt on their properties while increasing their cash flow from the rental payments.

The easiest way to figure the payments on an interest only mortgage is; loan amount x interest rate percentage / 12. An example of the payments on a $150,000.00 mortgage with a 7.50% rate would be;
150,000 x 7.50% = 11250 / 12 = 937.50

Interest only payments will not reduce the principal balance of your mortgage.

Another advantage of the interest only mortgage is that most lenders allow the borrower to qualify at the interest only payment. Since this payment is lower than a fully amortized payment, the result is that the borrwer can qualify for a larger mortgage, usually meaning a better or bigger house.

Having an interest only loan helps you to keep your monthly payments low. Although you do not reduce the principle balance of the loan, your house will appreciate over time, thereby building equity.